Gold’s price setting has moved from the West to the East since March – a shift that shows the United States is losing control over gold and possibly other financial markets, according to Willem Middelkoop, founder of the Commodity Discovery Fund.
The trend signals the early innings of a multi-year bull run for the metal, driven by de-dollarization and looming physical metal shortages, the Dutch investor said.
Investors “didn’t flee to Treasuries” during April’s market scare, Middelkoop said at the Mining Forum Americas last month. “They’re fleeing towards gold.”
Washington’s “weaponized dollar” has led Asian economies to “weaponize gold,” he added, tying the move to tight supply across gold, silver and copper and to the difficulty miners have been having in replacing reserves or increasing output.
“It’s the perfect storm developing in the gold space,” Middelkoop told The Northern Miner’s Western Editor, Henry Lazenby. “All dips will be bought.”
Since the shares of major producers still trade at about 10 to 12 times earnings, which is well below previous cycle multiples, the gold rally is far from being priced in, he said. Middelkoop urged producers to spend surplus cash on mergers and acquisitions instead of dividends. Quality juniors are still “pennies on the dollar.”
If Asia’s trading desks are influential and scarcity is real, capital may move from financial assets to hard assets, which could raise metals prices and spark more dealmaking, the investor said.
Watch the full interview below:
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