Gold Euphoria Is “Justified” – Expert

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Investors are looking for higher gold prices, and with good reason, said George Milling-Stanley, head of gold strategy at State Street Global Advisors. “The middle two quarters of 2018 were bad for gold because the dollar was extraordinarily strong, so was the domestic equity market in the U.S. The influence of all that tended to wane in December so gold picked up very, very nicely,” Milling-Stanley told Kitco News.

Gold Euphoria Is “Justified” – Expert


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George Miller Stanley head of Gold strategy for State Street Global Advisors joins us today. George So nice to have you back. Always happy to be here.

I’m happy to have you on because I was telling you and just come back from Vancouver Weezer’s Investment Conference where there was a lot of euphoria surrounding gold price and obviously I was there to three weeks ago so the rally was stronger than it is now. The question is is the bullishness that we’re seeing justified.

Yeah I think so. I mean you know we we’ve got higher prices than we had last year. I think most people are expecting gold to do well this year. Most of the analysts forecasts I’ve seen for the year as a whole are a good deal higher than where we are today around the 3800 dollar level. People are forecasting 1000 350 4300. There are braver people going even further than that. And I think that there is there’s there’s good cause to some optimism here.

You say braver people. Is it.

Is it too much of a risk to come out with such a look some of these forecasts are a bit a bit heroic let’s put it that way you know I think that it’s difficult to see 1300 unless we get a sudden surge of speculative money into gold in the way that we did back in 2011 right.

So let me ask you George what do you think is fundamentally missing from the picture today that we had in 2011.

Very simple. The speculative money that came flooding in from about the fall of 2010 right the way through until the fall of 2011. And that’s speculative money was was driven by the fact that gold in the previous decade from 2001 to 2010 had gone up a hundred dollars a year on average from 250 dollars an ounce to 1250.

So where’s that money now. Last year we were saying it was in the crypto currency space perhaps. Is it just all on the stock market.

I don’t think it was all in the cryptocurrency space I think there was a lot of small individual investors who have gotten burned in terms of that the cryptos last the last 12 months or so. Look when when the hot money left gold which was by the spring of 2013 was the final exit from gold for the hot money. I think they went into other commodities. I think they went into certain portions of the equity market that are still looking richly valued shall we say perhaps even overvalued. And I think they went into an end to real estate in parts of the country too.

But let’s look at Geraldine’s highest level in January’s levels we haven’t seen since September 27th I believe it was one point five billion of inflows. Shouldn’t that be moving a little higher.

I think what was a you know that was just a continuation of a trend that began in the fourth quarter of 2008. The middle two quarters of 2008 were bad for gold because the dollar was extraordinary strong and so was the domestic equity market in the U.S. that tended to wane. The influence of the tended to wane in December. So gold picked up very very nicely. GLT had inflows of one point a billion I think in the fourth quarter which was tremendous. Those inflows continued at the beginning of 2019. I’m very happy to see that too. We’ve seen some impact on the price. Prices have gone from from the 12 hundreds to the thirteen hundred dollar area so well above the midpoint of my trading range between 1000 150 and 1000 350. So I think this is all encouraging and you got perhaps euphoria that was that was your word and I think there’s justification for that. A couple of weeks ago you got a little less right now but I think most people are still looking for higher prices even if not with quite the same degree of enthusiasm as there were a couple of weeks ago in Vancouver.

George Munthali thank you so much for your words. Thank you for stopping by. Always a pleasure chatting with you. Thanks for the opportunity Daniel.

Good to see you again.

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