With many factors working in gold’s favor, it’s tough to tell why the yellow metal isn’t doing better, said Marc Lichtenfeld of the Oxford Club.
Gold has many points working in its favor at the moment, but to the frustration of many market watchers its price has remained firmly below last year’s high point so far in 2021.
Marc Lichtenfeld, chief income strategist at the Oxford Club, said he sees a disconnect between the yellow metal’s traditional fundamentals and what’s currently happening in the market.
“It’s so hard to tell what is going on with gold,” he told the Investing News Network.
“If you look back, let’s say 10 years ago, and told a gold investor that over the next 10 years the US government and governments around the world are going to be running their printing presses non-stop, and that oh, by the way, 10 years from now there’s going to be a global pandemic that’s going to kill millions and completely shut down the global economy, and the US government will be literally handing out trillions of dollars for free — you’d probably back up the truck and buy as much gold as possible, because gold should be at record highs and yet it’s not,” Lichtenfeld continued.
He has said previously that inflation is likely to be much hotter than many people expect, and has recommended that investors look at gold as well as value stocks during this time. These companies are generally more mature and are not growing quickly; often they will return some cash to shareholders.
“In a white-hot growth market typically growth stocks are the way to go, and those premiums on the valuations will typically increase and grow as earnings grow,” Lichtenfeld explained in the interview. “When things are flat or heading south, value stocks are often a better way because the valuations are low enough that there’s often a floor below the stock prices.”
He is also a fan of dividend stocks, especially dividend growth stocks, which raise their dividends each year. According to Lichtenfeld, reliable dividend increases are crucial during inflationary times.
“If we do enter a period where inflation is rising 5, 6, 8, maybe even 10 percent a year, that’s going to be critical to make sure your investments are not only paying you income, but growing that income every year so that you’re not losing your buying power year after year,” he noted.
Watch the interview above for more from Lichtenfeld on gold and the types of companies he thinks will be able to weather a potential inflationary storm.
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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.