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George Gero, RBC Capital VP, on why investors should stay away from gold in this market, but eventually return to investing in it in the future.
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And gold prices.
Fighting for gains after closing yesterday at their lowest level of the year -- zero RBC capital is here with us.
Your basic advice if I get this right is don't buy gold.
At this.
So however.
Gold I believe in the long term will perform a lot better.
Now you've had conflicting reports today.
Get HSBC bank lowering.
Their view of the gold price than you had Goldman Sachs upgrade.
Their view of the gold price so you have a good two way market going.
Good that's a good trade and where do you stand in those two views I don't -- -- -- now -- not at this time I've always said when you have a major sell off is when you add to your gold positions.
And you should maybe have like 5% of your assets in.
Some hard assets like gold.
Not necessarily just -- spears platinum there's palladium and they're so over OK now gold or copper children are more important now gold just double the 16100 dollar mark at what point should refer to start buying it it's a question of the economics.
What is happening.
Gold is or misunderstood.
Asset.
Gold actually it is an insurance against debasement of currency.
It's helper for you to maintain purchasing power.
And that's why you should own some gold now you have insurance on your automobile you'll never have to use it you pay a premium.
You also keep gold in your portfolio.
In case you're purchasing power suddenly dropped stress OK George but if I don't yet own gold and I don't wind checks start buying at what price point how much -- -- -- -- I think -- in the short term we'll probably see somewhere around 5050.
But the 1585.
As a very short term.
Based -- support area and probably a 1650.
On the upper side of this trading range over the next -- over the next six months.
Expansive 1595 doubts about -- goes down to 1550 and it goes up although.
I shouldn't trade would get to that they should definitely told that to -- are ever.
Well it's not a question of forever -- question.
Bob insurance.
On maintaining your purchasing power -- is a very good thing to have but people forget what -- out real purpose is.
Now other precious metals are important.
Platinum is very important.
And platinum has a lot of industrial uses yes platinum is used to crack -- Change crude oil into heating oil and gasoline and I'm happy for him but I don't talk about gold here yeah so let's get back that -- usually when there's fear of position fear in Europe right goes up in price.
Yet there's been fear in Europe and -- -- going down or why some time.
Gold also used to go up when the stock market sold off a lot.
And recently it's been going up and down with the stock market because people consider it as a risk trade credit risk or risk off trade OK and gold really isn't so much for betrayed as an investment.
All right although certainly gold traders -- -- everyday now Spain and Italy have been worries that they're gonna sell.
The gold they -- and their treasuries and this is gonna be the price down because they're such a vast increase in supply they can't have that much gold well they do for example in Europe Italy is the third largest holder of gold but then.
Let's not talk about the central banks this book about.
The large commercial and private banks that do all of a lot of gold and they may put that gold up as loans in order to get.
Dollar dollar into their -- -- that would increase which live.
And that -- -- -- and that may do that but it hasn't happened.
OK and it's just been -- fear but you -- -- predicted catastrophe -- guys if you took all the gold ever mining history put all together it only -- three or four Olympic size swimming pools which shows -- really that this is a Paper -- I I once read that somewhere but I wasn't sure that's always sort of bad.
All right thank you so much Georgia bureau -- -- RBC.
