Despite the release today of the hawkish minutes from the U.S. central bank's April policy meeting, savvy investors are still hedging their bets on gold products. While stocks rose when investors hears that the Federal Reserve may raise interest rates in June, many are focusing on the fact that fed officials did not actually commit to lift rates.
So far this year, economic performance has been surprisingly weak, both on the domestic and international fronts. This has helped gold prices surge, reaching a high on Tuesday of $1,281 per ounce. Negative interest rates, the sluggish economy and lack of confidence in central Banks across the globe, coupled with billionaire investors touting the benefits of buying gold, has fueled momentum for this precious metal.
High-profile Gold Investors
Many high-profile investors are getting aggressive about hedging their portfolios with gold. Legendary investor and Hungarian-American business magnate, George Soros, also known as “The Man Who Broke the Bank of England,” recently bought $264 million worth of shares of the world's largest gold miner, Toronto-based Barrick Gold (ABX), totaling 1.7 percent of the company. ABX shares have surged over 162 percent this year. In addition, Soros acquired 1.1 million options to buy SPDR Gold Trust (GLD), an exchange-traded fund that tracks the price of bullion.
Earlier this year, Soros was quoted by Bloomberg saying that China’s growth would unavoidably collapse with potential for a crisis and that the current state of the financial markets reminded him of 2008. Are his recent purchases motivated by fear of a similar crisis that the markets experienced that year?
Other high-profile investors hedging their portfolios with gold products include Soro’s former chief investment strategist, Stanley Druckenmiller, veteran trader and commodities investor, Dennis Gartman, and Jeff Gundlach, the influential bond investor known as the "King of the bond Market." Both Gundlach and Canadian investment bank RBC Capital Markets recently predicted that gold will soar to $1,400 an ounce this year.
Gold is already up more than 21 percent so far in 2016—it may be one of the best times to add gold products to your portfolio, if you haven’t already.
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