Joe Foster, Portfolio Manager and Strategist for the Gold and Precious Metals strategy, Van Eck, recently said the following:
“As gold hits its highest level for four months, we think its valuation is supported by the markets not pricing in the longer-term impact which further monetary tightening from the Fed could have on a late-cycle economy. Namely, that the tightening policy could end up helping push the U.S. economy into the next recession,” he said.
“In addition, we believe, the burden from increased fiscal deficits resulting from U.S. tax reform would further hamper the economy in the longer term. We expect gold to continue to form a base, trading in the $1,200 to $1,350 per ounce range in the near term, with a longer-term view that increased financial risk deriving from a potentially weaker or slowing U.S. economy, as well as heightened global geopolitical risk and political struggles in Washington D.C., could drive gold much higher.”
VanEck, of course, manages the two largest gold miner-focused ETFs, the GDX and GDXJ. It thus pays for investors to heed Foster’s commentary carefully, as his prognostications have indeed proved prescient in the past.
The VanEck Vectors Gold Miners ETF (GDX) rose $0.23 (+0.98%) in premarket trading Friday. Year-to-date, GDX has gained 0.60%, versus a 3.47% rise in the benchmark S&P 500 index during the same period.