According to Bloomberg Intelligence Senior Macro Strategist Mike McGlone, the current gold rally is here to stay, even as the stock market and crypto markets face an incoming correction.
On April 14, during an interview with Yahoo Finance Live, McGlone said that while gold is currently experiencing a slight pullback, it is inevitable that it will break through the $2,000 an-ounce level and never look back.
According to McGlone, the catalyst for gold to take off is the potential stock market rollover. While the stock market’s total returns have been around 300%, gold versus the S&P 500 has been relatively low on a 10-year basis. McGlone believes this is starting to reverse, and the last time this happened was around the start of the new millennium when the Federal Reserve was well into an easing cycle.
The strategist sees the Fed pivoting when the market makes them, and the number one thing to make them pivot is probably the stock market going down. The S&P 500 has been hovering around the 4,000 level, up or down 200 points from that, but McGlone believes that at some point, it will tilt back down. He thinks that the markets are getting it and that T-note yields are also getting it, but the Fed is still being vigilant against inflation, which is collapsing.
McGlone also notes the relationship between crude oil and gold, with crude oil in an enduring bear market that had a bounce last year but is tilting back towards that bear market aggressively. On a 12-month basis, it is down about 20%, and McGlone thinks it will go lower and follow natural gas.
As for how investors should buy gold, McGlone says ETFs are an easy way to do it. He also believes that the rally in US long bonds and declining yields will coincide with the gold rally. With deflation in fossil fuels encouraging inflation in gold, McGlone sees gold heading toward a severe deflationary recession.
And here is what McGlone said on Twitter on April 13 and April 14:
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