Request a Call

Please fill out the form below to schedule a call with one of our experienced trading consultants.


feature-image-sample
feature-image-sample

< Return to News Section

Gold: There’s no going back now – Velocity Trade Capital Research Commentary

Mar 23rd, 2020

We are launching Velocity Trade Capital’s research offering with a deep dive into gold and the potential ramifications of the evolving pandemic and the associated financial crisis (page 2). We also cover the broader picture, including key drivers of gold since 1975, and introduce a new model we use for our forecasts, based on US M2 and the historical levels gold has traded at in different macro environments.

Key points:

  • Our (financial crisis driven) bull case projects gold climbing to $2,000/oz by YE20, and a sustainable rise to +$2,500/oz by 2025, with peaks of +$3,000/oz possible. We see a similar playbook being employed by governments and central banks to that of the 2008 financial crisis, with a similar trajectory for gold in the aftermath.
  • Even before the pandemic, gold’s key price drivers were best aligned since 2009 – macro factors across the board indicate both short- and long-term upside. Even our pre-crisis base case saw gold rising steadily over the next 5 years.
  • A "return to normal” (or pre-2008 economics) now seems farfetched given the resumption of quantitative easing, the failure of monetary policy to generate growth and the coming debt explosion. The narrative has shifted from “kicking the can down the road” to acknowledging that this *is* the new normal.

The conditions that drove gold’s prior highs have returned, sadly this time with a human crisis alongside a financial crisis. Investors should be increasing gold weighting as a macro hedge and for leverage/growth via gold equities.

Happy to discuss further any time.

Regards,

Mike

Michael Siperco
Senior Research Analyst, Global Metals and Mining

+1 416 323 2150

michael.siperco

Download Velocity Trade Commentary PDF
Download PDF
Velocity Trade Capital Ltd. (Velocity) is a member of the Investment Industry Regulatory Organization of Canada (IIROC), the Canadian Investor Protection Fund (CIPF) and participating member of all protected Canadian marketplaces including the Toronto Stock Exchange and TSX Venture Exchange. The Research Distribution Policy of Velocity is to allow all clients that are entitled to have equal access to our research and all final research reports are disseminated to all clients and potential clients of Velocity at approximately the same time in electronic form. Clients may also receive Velocity research via third party vendors. IIROC Rule 3400 disclosures, analyst certification and other important disclosures can be found on the last page of the attached research report or obtained by writing to Velocity Trade Capital Ltd. 100 Yonge Street, Suite 1800, Toronto, Ontario, Canada, M5C 2W1.
Nothing in this research shall be construed as a solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any transaction. In preparing this research, we did not take into account your investment objectives, financial situation or particular needs. Velocity sales department, trading personnel and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions which are contrary to the opinions expressed in this research. Before making an investment decision on the basis of this research, you need to consider, with or without the assistance of an adviser, whether the advice is appropriate considering your particular investment needs, objectives and financial circumstances. There are risks involved in securities trading. The price of securities can and does fluctuate, and an individual security may even become valueless. International investors and Wholesale Clients are reminded of the additional risks inherent in international investments, such as currency fluctuations and international stock market or economic conditions, which may adversely affect the value of the investment. This research is based on information obtained from sources believed to be reliable, but we do not make any representation or warranty that it is accurate, complete or up to date. We accept no obligation to correct or update the information or opinions in it. Opinions expressed are subject to change without notice. No member of Velocity accepts any liability whatsoever for any direct, indirect, consequential or other loss arising from any use of this research and/or further communication in relation to this research. Clients should contact analysts at, and execute transactions through, a Velocity entity in their home jurisdiction unless governing law permits otherwise. Members of the Velocity Sales and Trading Department provide desk commentary that is not a product of the Velocity Research department and not subject to any other regulation.
This research has been prepared for the general use of the institutional clients of Velocity and must not be copied, either in whole or in part, or distributed to any other person. If you are not the intended recipient, you must not use or disclose the information in this research in any way.
If you have received this message in error or would like to be removed from this list, please click here or email us with the word ‘REMOVE’ in the subject line.