Market insights and analysis

How dynamic, risk-managed investment solutions are performing in the current market environment

4th Quarter | 2020

Market insights and analysis

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Updates on how dynamic, risk-managed investment solutions are performing in the current market environment.

Gold prices continued to consolidate around the center of a large pennant formation on the weekly chart, closing the week at $1,777.40 per ounce (see the following chart).

This consolidation may provide a buying opportunity for investors to increase their portfolio allocations to gold. The historic fundamentals for a gold bull market are lining up solidly for a sustained move upward.

According to investment company Manning & Napier, “Every gold bull market over the last 50 years has begun with a catalyst that propelled significant growth in the money supply. … Inflation is another metric that has traditionally been associated with gold bull markets. … Lastly, real interest rates deserve specific mention too as falling real rates have generally been a positive for gold. …

“Policymakers have been remarkably forceful in responding to Covid-19, resulting in substantial recent money supply growth in the US, and they appear willing to continue to throw money at the crisis in the year ahead. These current and future policy aims are contributing to growing inflation worries. ... Moreover, the Federal Reserve’s desire to maintain interest rates at extraordinarily low levels has pressured real interest rates lower, and they now sit well below 0%.”

Rick Andrews is president of Avant Capital Management.



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