Even gold bugs have to admit that the yellow metal has seen better days. After hitting record lows on April 15th, many analysts have speculated that gold may no longer be a viable investment option, at least not in the way it has been in the past five years. With investor faith and gold prices reaching fresh lows, some see these new market conditions as an opportunity. Well-known for his high opinion of gold and commodity centered investment strategies, Peter Schiff thinks these low prices could provide a huge payoff for savvy investors who are willing to continue gambling with gold prices [for more gold news and analysis subscribe to our free newsletter].
After starting 2013 at $1,650 per ounce, gold has fallen more than 12% in just the last four months. This downward slope isn’t an entirely new trend, prices are down 23% after hitting all time highs in the fall of 2011. Combined with equity markets enjoying some of the best returns since the recession, investors have lost interest in gold in favor of more risky equities, making it hard for the commodity to gain any traction.
One of the most obvious signs of this change in taste has been the massive outflows from GLD, which has fallen from the second largest ETF by assets to third after $14 billion in outflows this year. In fact, the once infallible fund is getting a run for its money from fourth-place iShares Emerging Markets Fund (EEM) [see also Jim Rogers: Gold Will Resume Its Bull Market].
Schiff, president of Euro Pacific Capital and noted gold bug, believes that we are in for a bullish long-term trend for the precious metal, pointing to loose monetary policy and constant money printing as the source of future market instability. He has even found the silver lining in the most recent gold price drop, stating that “these momentary panics allow us to buy their (fair-weather investors’) gold at steep discounts.”
It is important to note that Schiff does not believe that gold is the right investment for everyone, but he believes that those who have abandoned gold after the most recent scare lack a “clear concept of the monetary transformation taking place” and that in the long term this yellow metal remains a powerful play.
Disclosure: No positions at time of writing.