The first quarter of 2023 brought strong demand for gold, but buying fell off in Q2.
Speaking to the Investing News Network, Rich Checkan, president and COO of Asset Strategies International, explained that financial planners helped drive demand in Q1 as they sought physical metal for their clients. But in the second quarter people put too much faith in the US Federal Reserve and purchases dropped off, at least at the retail level.
“I think part of what’s propping up the gold price right now is central bank purchases, not the individual investor purchases,” he said. “And I don’t think they’re going to get going until the Fed’s done — but I think they’re pretty close.”
Checkan expects one more interest rate hike from the Fed, noting that the central bank simply can’t service US$32 trillion in debt. “As soon as they pause and then starts receding, I think investors will get in the game,” he said.
While the Fed plays a large role in controlling inflation, Checkan pointed out that it can’t fix the problem alone
“They need Congress to stop overspending. Congress is spending more than they take in — that has been the case for decades, it’s been off the charts the last two administrations, both Democrats and Republicans are doing it … they both need to be fiscally responsible; they’re bad stewards of our money,” he said. “As long as they overspend, the Fed is forced with only two decisions: let the currency default or inflate it. They’re never going to let the currency default, so they’re going to inflate the currency, print more money. That makes every single dollar out there worth less, and it eventually becomes worthless.”
When asked what advice he would share with investors, Checkan said those who haven’t allocated a portion of their portfolio to gold should begin to do so. In his view, a 10 percent allocation for wealth insurance is appropriate. “Buy it slowly, buy it over time — but fill that allocation for your wealth insurance,” he said. “I think you’re going to need it in the future; I hope you don’t.”
Watch the interview above for more from Checkan on gold and the US Federal Reserve, as well as BRICS currency rumors and the FedNow payment system. You can also click here for our Rule Symposium playlist.
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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.
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