In the final issue of his “Basic Points,” publication global commodities strategist Don Coxe has once again stressed the importance of maintaining a portfolio investment in gold—primarily through gold mining stocks.
Although commodity speculators’ gold interest has waned, along with the bullion price, Coxe noted, “The astonishing recent increase in Chinese and Indian economic power and personal wealth have naturally meant that interest in gold as an investment among citizens in those countries has surged.”
China has become the world’s largest gold buyer as leading banks have made bullion buying (gold, silver and platinum) easy for customers.
“The richer Indian people become, and the richer Chinese people become, and the more than central bankers have reason to worry about the politics and profligacy of the Eurozone and the US, the more those gold buyers will influence gold prices,” Coxe predicted.
“We remain of the view that gold’s long-term outlook remains bright. It may be the last asset left standing if governments run out of money to spend and central banks run out of money that people believe in,” he observed. “But it doesn’t require Apocalypse to be a sound, long-term investment.”
Coxe insists that the likelihood the S&P will perform as well as gold in the next three years is remote.
“The Fed is resuming rapid expansion of the monetary base. Japan will soon be flooding the currency markets with yen. The ECB remains expansionary,” he observed. “The three major currencies are, once again, simultaneously reflating, and promising to stay expansionary until the Promised Land of Prosperity appears on the horizon. U.S. fiscal deficits will continue at rates that would have seemed unacceptable even a few years ago.”
“It is almost impossible to conceive of a more bullish long-term backdrop for gold,” Coxe declared. “The good mining stocks should be core investment for almost any long-term oriented portfolio.”