Fears of a vaccine pushing the gold price down are overplayed, said Lobo Tiggre of the Independent Speculator.
“I think this is another one of these overblown things. Yes, we have seen gold move on vaccine headlines, I don’t deny that, but it’s a mistake to think that 2020 gold is all about the vaccine,” Tiggre told Kitco News.
The most important fundamental drivers of gold are still tied to monetary and fiscal policies, Tiggre said.
“We have been on a volatile upward trend since late 2015, well before COVID. But even the more recent and dramatic upturn started after the Powell pivot. This is really about monetary and fiscal policy, starting, first and foremost with monetary policy. It’s about negative real rates,” he said.
Even if a vaccine were to be introduced, it would still take time for the economy to normalize, Tiggre noted, and the fundamentals behind the gold price would not change.
“Knee-jerk reactions” could still happen on the introduction of a vaccine, Tiggre said, and he would view those as buying opportunities.
“If you’re concerned about a bigger market crash, you may not want to buy every dip now. If you’re convinced that there’s going to be a big market crash and that’s going to hit even gold and silver, then you do not want to be buying the dips now. But if you’re not sure of that, if you think it’s unlikely, then things like this, where people knee-jerk drop gold and it has a big impact on gold stocks on some really not terribly relevant vaccine news, then that is a buying opportunity,” he said.
Tiggre does see another market-wide crash that impacts both equities and precious metals as a possibility, but rather than sell off before this happens, he prefers to stay in positions that he likes and average down should the opportunity arise.
“The number one thing that I want to communicate is that I personally am not selling anything in front of the crash. I’m not in mainstream equities, I’m mostly in gold and silver stocks that I think are going to do well regardless, that I would be happy to buy more of if we have a crash,” he said.
He adds that there is a possibility that markets would just continue going up.
“All that easy money that we know is coming is so bullish that it’s possible that we may not get this crash, it’s possible that that would just push things higher, and I would hate to sell now out of a fear of a crash that doesn’t happen and watch all these stocks that I really believe in take off without me,” he said.
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