“Gold and Silver Loading up for Major Move”

Stockholm (HedgeNordic) – The price of gold and silver is about to break out from a long period of range bound trading with low volatility, Eric Strand (pictured), portfolio manager of Pacific Precious and Pacific Multi Asset told EFN Råvaror in yesterday´s broadcast from Gothenburg.

“There are many things, apart from technicals, that point to a major move, what is still holding back prices is that equities look stable still despite the short-term volatility spike that we saw in the beginning of February”, Strand commented the current price action for precious metals.

Strand emphasizes that gold has been a solid investment not only in the current millennium but over the last five millenniums. He argues that the inflated balance sheets of central banks and the high debt levels in the world´s economies lay the ground for a “price explosion” in precious metals markets. The central banks rescue actions in 2008 made balance sheets increase twofold, since then debt expansion has just continued, he says. Instead of paying off debts problems have been solved through adding liquidity to the system, at the same time debt levels have expanded even more.

“The situation will be put to the test when borrowers want their money back, this will result in a price explosion in precious metals if not solved properly. You need to position now for such a scenario, not when the event unfolds, then it is too late”.

Strand also commented on the development of cryptocurrencies and how the increased interest for these “cryptos”,  that according to Strand should not go under the label currency, could be a sign of increased investor anxiety and ultimately result in an increased demand for gold, as investors look for alternatives.

“The cryptos´ worst enemy is the cryptos themselves. You can always create a second or third version of Bitcoin that is even better than the first one when having reached the capacity limit for the original version, but what is then the value of the first version?, Strand asks”

The full EFN broadcast can be seen below (in Swedish):

 

 

 

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Jonathan Furelid

Jonathan Furelid is editor and hedge fund analyst at HedgeNordic. Having a background allocating institutional portfolios of systematic strategies at CTA-specialist RPM Risk & Portfolio Management, Mr. Furelid’s focus areas include sytematic macro and CTAs. Jonathan can be reached at: jonathan@hedgenordic.com

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