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Button noted that in the developed world economies, and in the United States in particular, “investor interest is dismal” despite new record prices continually being set in other national currencies. “The reality of financial markets is that they're U.S.-dollar driven, and no matter how well you perform in domestic currencies, it doesn't seem to matter until you've done it in dollar terms.
“There will always be a demand for alternative, hard assets,” Button said. “Gold has been fulfilling that role, that instability role, that uncertainty premium, that ‘put something in your pocket and leave everything’ role.” “Maybe that just ends up in a grind up to $2,500 or something like that, which I think everybody would be happy with.”When gold is assessed from the perspective of the North American and European investor class, it’s measured apples-to-apples with other assets, and the essential question is which one will perform best. Investors who believe themselves safely ensconced in ‘Fortress USD’ might not value gold’s low volatility and wealth-preservation attributes. The dollar and the U.S.
“So maybe the question is, the people who’ve been buying gold in the last year, is it the strong hands buying, or is it the fast money buying? I would wager that it’s the strong hands that have been accumulating gold,” he said. “Even looking at GLD over the last year, looking at trading volumes, it just hasn’t been great, which again points to it being physical buyers, real buyers, not financial, short-term buying.
“We'll have to see how that plays out, but if it comes out bad for Russia in the European election, the U.S. election, then I think we see more invasions, and I think we see this Ukraine conflict spread,” Newsom said. “So you're seeing those countries buying up more gold.” “If you see your own central bank buying and hoarding, coming into every dip in the market and buying, then what are you doing? You're creating an underlying put in the market,” he said. “You're creating your own gold standard that is an offset to your own fiat currency. You don't know where the value is going to be, so you have no confidence in it.
“Even the ‘have-nots’, they come and buy cards with little specks of gold in them. It's like a microdose of gold, but they still buy it.”This runaway global inflation, massive political uncertainty, and widening military conflicts are coming together to create a unique set of conditions which support demand for gold.
“I think it's going to keep it strong,” he said. “Not necessarily gold futures, they're going to sway back and forth, but fundamentals win in the end.
Newsom said that if and when North America and Western Europe are forced to join the rest of the world and be late buyers, they'll do it without blinking, even if gold is at historically unprecedented levels. “At that point, I think it does change the nature of the beast,” he said. “And it wouldn't be too surprising to see gold and stocks going up at the same time.”