It doesn’t matter who’s right or wrong, you can profit from gold
When you look at the bullish case for gold, Paulson and others have argued that instability in emerging economies and loose monetary policies around the world have created a perfect situation for global inflation.
And because gold is the original hedge against inflation, the gold bulls are standing fast with their call that the shiny yellow metal’s price will rise as soon as inflation starts to hit.
So if the gold bulls prove to be right, the gold price will rally. So it’s straight forward enough to see how you can profit from gold.
But what if the bears are right?
When you take a look at the gold bear argument from Goldman Sachs and Barclays, and you’ll see they’ve built their case on the fact that the US Fed is tapering its stimulus programme.
And as the Fed cuts back on stimulus, there are fewer dollars in the market. That makes each dollar more valuable. And the gold price will decrease in dollar terms.
So that argument makes sense if you’re buying gold in dollars.
But if you’re buying gold in rand, then it actually strengthens the buying case.
You see, if the dollar gold price is only going down because of a strong dollar, then the rand will likely weaken against the dollar as well. And that means the rand dollar price of gold will hold its value.
Just take a look at the chart below. It shows how even though gold has had its biggest yearly fall in dollar price since 1981, dropping more than 28%, the rand price of gold has only fallen 6%.
And with the gold price either going up or the dollar going to strengthen against the rand, the rand-gold price will head higher.
Either way, it’s a win win situation for you.
So what’s the best way to profit from the rand-gold price?
For my money I like the New Gold ETF.
Buy it today and you can profit whether the dollar gold price goes up or down.
Until next time,
Here’s to staying ahead of the game.