Categories: General Market Commentary / Precious Metals
Topics: General Market Commentary / General Precious Metals

Investment Veteran Backs Gold on Risk of Trump Policy ‘Mistakes’

Investment Veteran Backs Gold on Risk of Trump Policy ‘Mistakes’

-- Metal seen advancing to $1,300/oz before the end of the year

-- Roche is more likely to increase than decrease gold holdings

Gold will climb about 6 percent through the end of the year as investors seek a shelter from the rising political risk surrounding President Donald Trump, according to Independent Strategy Ltd.’s David Roche, who has about 45 years of experience covering markets.

Bullion is set to rise to $1,300 an ounce, while most assets, such as bonds, will post negative returns, the president and global strategist at the London-based economic and financial consulting firm, said in an interview on Feb. 3.

“The amount of political risk being created by this new U.S. president and administration is going to create an enormous amount of international tension and uncertainty, and will probably result in a trade war at least with China and possibly other areas,” Roche said by phone from Hong Kong. “I want to see what this administration, what sort of mistakes they’re going to make.”

Trump’s first two weeks in office have fired up investor concerns with his withdrawal from the Trans-Pacific Partnership, commitment to build a wall on the Mexican border, and a storm over immigration curbs on seven Muslim-majority countries. While the Federal Reserve may raise interest rates three times this year, increasing risk will lure investors to gold, Roche said.

Prices have already risen to the highest in more than two months and posted an increase of 6.6 percent this year, reversing a 13 percent slump in the fourth quarter. Bullion was at $1,223.89 on Monday by 11:29 a.m. in Singapore.

“I probably would be more inclined to increase then decrease at the present time,” Roche said, referring to gold’s recommended weighting in a diversified portfolio. “I might do that if the gold prices are a bit weak, if it drops back below let’s say $1,160.” The prospect for accelerating inflation is another reason to own gold, even with the outlook for rising interest rates, he said.

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