GROW - VIDEO - Frank Holmes: Bullish on Gold Perfect Storm of Inflation Ahead
The gold price reached a new all-time high nearly 12 months ago, and as the summer months set in again investors are wondering whether it may do the same thing this year.
Speaking to the Investing News Network, Frank Holmes, CEO and chief investment officer of US Global Investors (NASDAQ: GROW ), said he thinks it’s possible for the yellow metal to set a new record in 2021.
“I think it’s quite easy this year to take out last year’s high. It’s very easy to do that,” he said.
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“And once people start believing that the Consumer Price Index (CPI) number is (an) inaccurate forecast of inflation — that there have to be other factors, which has happened in previous cycles — then all of a sudden gold will get a brand new element to it.”
Holmes explained that the CPI is understated because it doesn’t track food and energy . In his view, rising inflation is “baked in” for the next couple of years given the amount of pent-up demand related to COVID-19, as well as continued money-printing efforts around the world.
The US Federal Reserve remains seemingly unconcerned about inflation, and has repeatedly described inflationary activity as “transitory.” When asked if he expects any meaningful changes at this week’s Fed meeting, which runs from Tuesday (June 15) to Wednesday (June 16), Homes said he does not.
“I don’t see any changes. The stock market is acting still pretty resilient,” he explained. “I think it’s full throttle of printing money around the world — we’re talking about trillions and trillions of dollars. And you still have this pent-up demand, so therefore you’re going to have the perfect storm of inflation, and if you can borrow inexpensively you’ll be ahead of the curve.”
Holme also has a positive outlook on bitcoin, and he noted that enthusiasm and acceptance for the cryptocurrency are on the rise. However, he still believes investors should allocate a larger amount of their portfolios to the yellow metal, which he views as more stable.
“(Bitcoin is) very volatile; it’s much more volatile than gold — it’s six times more volatile. So I’d advocate 10 percent into gold and gold-related quality stocks and 2 percent into crypto.”
Watch the interview above for more from Holmes on gold and bitcoin, as well as the potential he sees for the US Global Jets ETF (ARCA: JETS ).
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.