John Kaiser of Kaiser Research sees gold repricing to the US$2,000 to US$3,000 per ounce range, and recent events make him more certain that will happen.
The Chinese response to the COVID-19 coronavirus was too late, and the effects will continue to disrupt the global supply chain, ultimately battering equities markets. That was the sentiment John Kaiser expressed at the Prospectors & Developers Association of Canada (PDAC) convention.
“(COVID-19) is a major disruption in the Chinese economy, which is still part of the global supply chain,” said the founder of Kaiser Research.
“Things are not arriving on the shelves anymore, Amazon’s (NASDAQ:AMZN) shelves are getting empty — this is a problem that’s rippling through the economy and the market is reacting negatively.”
Kaiser, who also discussed the emergency interest rate cut announced by the US Federal Reserve last week, noted that the parallels being drawn between the current market and 2008 are unfounded.
“It’s not the (same) kind of catastrophic event as 2008, when it was about the collapse of the entire financial system that hurt 100 percent of the people,” he said. “This is a haircut for the 1 percent, hair that will grow back once this is stabilized.”
The sector watcher did point out that COVID-19, which has ravaged parts of China and has infected more than 100,000 people globally, still has yet to significantly harm the US, with the number of cases there still relatively low.
“Now the concern is what is the American response going to be to this, and will it be as disruptive as the Chinese response?” he said. Kaiser does not see Fed’s emergency action as being effective.
“How many more of these do they have left?” he questioned. “We’re going to be at 0 percent interest rates and then what? That hurts all the the savers, the retirees who are now getting zero on their savings. I don’t think this is the solution to the problem that we’re facing.”
To hear more from Kaiser on economic volatility and the performance of gold, watch the video above. You can also click here for our full PDAC playlist.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
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