Gold and silver prices have slid 8% since the election of Donald Trump to the presidency of the United States, but banks are still suggesting investors buy into precious metals regardless of the price drop.
On Thursday, JP Morgan analysts cited a “positive flow trend” into gold and suggested that the recent Bitcoin rally shows investors are still interested in safe-haven assets.
Deutsche Bank strategists shrugged off the extreme gains seen in equities, which have gained more than 25% in consecutive years, a rarity compared to history. Instead, the bank released a note suggesting gold is the asset to hold in the future.
“U.S. equities haven’t actually had a great quarter century in real terms,” said Jim Reid, head of global economics and thematic research at Deutsche Bank. “The only worse quarter century in real terms was 1900-1924, which saw bank collapses in the early part of the period, a world war later on, and a mini depression and pandemic toward the end of it.”
George Saravelos, head of FX research at Deutsche, gave several reasons for gold’s lackluster movement in November.
“The market is not worried about U.S. credit risk,” he said. “If the market was becoming concerned about excessive fiscal deficits, fiscal dominance and a loss of central bank independence in the U.S. gold would be the first thing that would be going up.”
He also noted the slow-down in purchasing by reserve banks across the globe, which previously had been a large contributor to the precious metals rally over the past year.
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