Rising interest rates and a stronger US dollar have weighed on gold, but there’s another element at play as well.
Gold has left some market watchers underwhelmed this year after 2020’s all-time high. What’s keeping the yellow metal down, and is there an end in sight?
Speaking to the Investing News Network, Will Rhind, CEO of GraniteShares, said rising interest rates and a stronger US dollar are part of the reason gold has failed to gain much steam.
But there’s another element at play as well. “I think what really is going on though is we’re transitioning in terms of this gold market from (last year’s) crisis hedge environment … to gold being not needed as a crisis hedge for the moment,” he explained. “We’re transitioning into an inflation hedge environment.”
Discussions surrounding inflation have been gaining steam, and Rhind said that in his view it’s a conversation worth watching. “This is definitely a real thing. We’re still very much in the early stages of it in terms of wholesale inflation across the board, but it’s something we’re starting to see more and more creep into the mainstream media,” he commented.
Aside from gold, Rhind also spoke about platinum, another metal he’s bullish on.
“My view on why platinum is an attractive metal is not so much that it has immediate industrial demand coming from the automotive sector, which is still the largest part of demand for platinum,” he said. “I think that it’s going to be a really important metal going forward as we transition to a sustainable energy economy (and) sustainable energy infrastructure, particularly in the production of hydrogen.”
Rhind added, “From that perspective, I think (platinum) could be a metal like lithium — hydrogen I think can do for platinum what batteries have done for lithium.”
In the more immediate future, he reminded investors that platinum can be used as a substitute for palladium in catalytic convertors (and vice versa). Although the former is traditionally used in diesel-powered vehicles and the latter is normally used in gasoline-powered vehicles, they can be swapped.
“With palladium prices trading at almost twice the price of platinum, that has to be an attractive opportunity for automakers to substitute palladium for platinum,” he said.
Watch the interview above for more from Rhind on gold, platinum and the overall commodities space.
Don’t forget to follow us @INN_Resource for real-time updates!
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.