Respected ETF manager VanEck has swung to the bull side on gold, saying that the good times for the precious metal are about to start rolling.
In a note released to investors, cited here, the portfolio manager of its VanEck International Investors Gold Fund (INIVX), Joe Foster, said that the recent rise of the precious metal was just a sign of things to come.
“We have talked frequently about the fundamental and technical importance of the $US1,365 ($A1,961) per ounce level for gold, which has roughly been the top of its trading range for the past six years,” he wrote.
“If [it] holds above the $1,400 per ounce trading level over the course of this week, we believe there is a very good chance that this marks the beginning of a new gold bull market. Given the long-term technical support and fundamentals, this bull market is likely to last several years.”
He said geopolitical tensions, signals from both the US Federal Reserve and European Central Bank that rate cuts could be on the way together with a softening US dollar meant that it was a good chance to keep above the $1,400 mark.
In that context, he wrote, the market could start looking around for new opportunities to buy into the story without paying over the odds — and that means looking at gold companies who may have low valuations.
“Gold stocks are trading at low valuations and many mid-tier and junior stocks are carrying deep discounts,” he added.
“If we are correct in calling for a stronger gold market, we expect the equities to significantly outperform bullion. Gold companies carry earnings leverage to rising gold prices that should receive an additional value boost as positive sentiment returns to the sector.”
This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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