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Gold Will Need These Catalyst For Long-Term Price Appreciation

Gold has been driven by the U.S. dollar in the short-term, but on a longer term horizon, it will need more than just a weaker dollar for a sustained rally, said Will Rhind, CEO of GraniteShares. “I think longer-term, there are three key catalysts. One, apart from the dollar itself, it has to be lower or trade softer than it is right now. It’s been a big, big headwind for gold. I think that inflation as well, we have to do a little bit better on the inflation side, particularly if there’s an expected inflationary surprise,” Will Rhind told Kitco News. He noted that the last catalyst may be more geopolitical in nature or a major selloff in equities or bond markets.

Will Rhind
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GraniteShares CEO Will Rhind: Gold Will Need These Catalyst For Long-Term Growth

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Transcript

And gold has moved higher this week on the back of a slightly weaker U.S. dollar. So can we see a sustained rally past. Twelve hundred this time around. Joining me today as well Ryan CEO of granite shares Willow. Welcome back to the show. Thank you. Good to be here. So on behalf of all gold investors out there what’s your take. Well.

I think like you say the dollar will have probably decreased a little bit more from here. So the bump is not going to be enough to sustain it. But I think look there’s some positives coming in will coming into Divali the Indian wedding season which is typically a strong period for gold buying. We saw some decent buying a couple of months ago out of India and the gold market. The Russian Central Bank has been buying room the Chinese are still buying other central banks around the world so we do have some positives. I think that if we have a strong Divali we could see a lift from from here.

Bit of a lift here so short term definitely a dollar play here but longer term what are some factors that you’re here that can move the gold price really move it. Longer term I think in terms of longer term it’s the there’s the three sort of key catalysts one apart from the dollar the dollar itself you know has to.

Be lower or trade softer than it is right now it’s been a big big headwind for gold. I think that inflation as well. We have to do a little bit better on the inflation side particularly as an unexpected inflationary surprise. I think gold could benefit a lot from that. And then lastly some kind of catalyst be it geopolitical be it a market dislocation. You know we’ve had this stock market and the strength that we’ve seen now for a decade.

And you know if we see a dislocation or a selloff in stocks or in the bond market you know I can help because we just don’t have the volatility that’s something investors it’s not moving so they’re thinking well how am I going to make money off of this right.

Absolutely and capital goes where capital is treated best. And right now you know with the strong equity market it is very difficult for people to make that kind of capital allocation decision to put money in gold. Unless you’re a contrarian unless you’re diversifying portfolios in anticipation of something.

And last year it was easy to blame the crypto craze. You know we were saying all because the money is going into bitcoin but obviously that’s not the case here.

It’s not. I mean I think again there was a little bit of that in terms of the capital allocation decision that people were going into bitcoin other crypto currencies when the the prices were skyrocketing but obviously that’s reversed this year and it’s still about capital allocation I think where we have seen money coming into gold is people looking to actually take losses in more expensive gold ETF for example and put money into lower cost ETF such as the one that we offer but it’s really that’s repositioning activity rather than sort of fundamental bullish allocation.

Let’s turn to the PGM now platinum platinum group metals you know prices we haven’t seen in decades here especially when we’re talking platinum demand is down about 2 percent since last year. What’s what’s the story here. How do you see it.

So demand is down supply is also constrained are forecast to be constrained this year down by about 2 percent. And I think the backdrop really is you know the auto catalyst story with with platinum is challenging because the majority of demand comes from the diesel engine and diesel engines have had a tough time since Volkswagen the the Diesel Gate scandal in Europe. So demand for diesel cars has come off a little bit but nowhere near the amount that the kind of doom mongers have been sort of forecasting in the press. So I think you know the prices come down a lot and platinum and we’re now seeing prices which you know look you say you know it’s a deck at low price for platinum and the discount when you go goes right. Right. Which is incredibly unusual situation. Platinum is a good story in terms of who has jewelry demands a strong jewellery metal particularly in Asia. But obviously here in theU.S. as well it has an investment story rarer than gold as you know better fundamentals than gold in terms of supply and demand. And it has a future use case I think which is also powerful in your clean or new technology to fuel cell vehicles. Definitely I think. Platinum

is in the safer cap there. But what about palladium you know you say there’s a lot of doomsayers out there on the PGM space but could you see it that one day that metal could become obsolete in the sense that we don’t really need it anymore with with electrical cars.

I think in terms of palladium the case is harder to make a longer term than that for platinum and like you say you know palladium has benefited a lot from inclusion again in order catalysts just like platinum palladium more for gasoline powered vehicles rather than diesel. And as the prices you know is being high relative to platinum it’s time to see some automakers and some rules in the market of substitution maybe people start to use platinum in gasoline engines rather than palladium which would obviously affect the palladium market. There’s not really a jewelry story there like there isn’t time. And also in terms of your future use cases I know I’m not seeing the strength or the same kind of story as platinum or some of the other metals.

Well Ryan thank you so much for your thoughts today. Thank you. And thank you for watching welcome back. Tomorrow off.