For many investors, this is an ideal time to buy gold. However, Tom Lydon and Steve Grasso warn that a certain “anomaly” should not blur the view.
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• Good time to gold to buy?
• Keep track of relationships with gold mine ETFs
• Still optimism about gold
In “ETF Edge”, CNBC’s Bob Pisani recently spoke with Tom Lydon, CEO of ETF Trends, and Steve Grasso from Stuart Frankel about the current market situation – especially with regard to precious metals – especially gold.
Investors should pay attention to “anomaly”
Gold ETFs had more than $ 500 million in outflows in the early weeks of 2020, CNBC reports. The enthusiasm for precious metals, especially gold, has recently subsided. So is it a good time to buy gold? As the industry professionals warn in an interview with CNBC, investors should carefully consider buying precious metals. Caution should be exercised, as a certain area of the precious metals market tends to “see oversized swings in relation to the metals themselves,” Grasso points out. “Gold mine ETFs always outperform two to three times what the underlying commodity does, both up and down. So if gold underperforms and trades downwards, gold mine ETFs will do about two to three times as much falling. It’s just an anomaly that always occurs and you have to be aware of that when investing in a precious metal, “said Grasso in” ETF Edge “.
Optimism about gold remains
In general, confidence in gold declines with the upturn in equity markets, ETF Trends reflects Lydon’s assessment. Nevertheless, gold is expected to resume momentum from last year, the expert expects. “There is a certain momentum in the gold area. I would not bet against it,” he explains in the interview. Nick Colas, co-founder of DataTrek Reserach, is also optimistic. According to him, the recent losses are due to “a certain rebalancing of the portfolios at the beginning of 2020”. “I don’t think it’s fundamentally bad. In fact, central banks are still buying a lot of gold. It looks pretty good for 2020, too,” quotes CNBC Colas.
Nevertheless, investors should not be blinded by the development of gold ETFs, warn the industry professionals, but look at the complete picture and decide accordingly whether it is a good time to buy precious metals such as gold.
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