Why is billionaire Stanley Druckenmiller back in gold?
*MarketWatch, by Mark Decambre, February 8, 2017
”Stanley Druckenmiller seems poised to make a killing on gold”
”In a Bloomberg interview on Tuesday, Druckenmiller said he dipped back into gold in December and January. His rationale is fairly simple. ”I wanted to own some currency and no country wants its currency to strengthen,” He continued: ”Gold was down a lot, so I bought it.”
In fact, gold, viewed as a haven asset which often trades in the opposite direction of equities, has been on an upswing lately. Gold futures have climbed 2.8% in February and have gained about 7.9% year to date, according to FactSet data. April gold is trading at the highest level for a most-active contract since Nov. 10. Comparatively, the S&P 500 is up a meager 0.7% in February and about 2.5% so far this year. The Dow has gained 1% so far in February and 1.5% year to date. Only the Nasdaq Composite, on pace to register a 1.2% February climb and a 5.6% return this year, is even close to gold’s golden gains.
So-called animal spirits were kindled when Trump won on Nov. 8, driving stocks higher on promises of a raft of pro-business policies. However, stocks which have crept into record territory in recent trade, have been mostly moving sideways amid confusion about the president’s legislative agenda. That includes his ability to prioritize tax cuts over controversial executive orders to ban travel from predominantly Muslim countries.
The fact that gold is in ascendancy along with stocks is an oddity. But the precious metal is garnering some support from a number of factors.
Inflation expectations are rising and gold tends to be used as hedge against inflation, or rising prices. Weakness in the dollar has also benefited dollar-priced metals, which tend to draw interests from buyers using other currencies.”
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