International player forecasts big returns on precious metals
Gold and silver mining companies are expected to generate significant upside returns for SMSF investors in the long run, with precious metal markets expected to bottom out within one to two years, according to the online global trading arm of Saxo Bank Group.
Saxo Capital Markets global macro strategist Kay Van-Petersen said global markets are in “uncharted territory” with quantitative easing at levels never seen before historically, unprecedented money printing, and the confusion in the market demonstrated by strong rallies and sell-offs.
Mr Van-Peterson said the potential for a global slowdown coupled with “irresponsible lose monetary policies from central banks” suggests that investors may want to consider an investment in gold and silver.
Over the next one to two years, Mr Van-Petersen said he expects gold and silver miners will bottom out, especially with the advent of geopolitical risks including the US elections, China trying to bottom out, the Fed tightening, and events in the Middle East.
Speaking to SMSF Adviser, Mr Van-Petersen said he has an “extremely high conviction on precious metals” and other assets with finite supply that governments are unable to interfere with.
“I think gold is really going to outperform. I think from the current US$1,230 levels gold will reach US$1,500 within six to 18 months,” he said.
The best way to gain an exposure, he said, is through the precious metal mining companies as they will provide investors with the most leverage.
“If gold reaches $1,500, some of these gold miners could be seeing 200 to 300 per cent returns,” he said.
Generally, he said, investors should be looking for gold companies that are paying down debts, that are deleveraging and that are long-term operators that have been in the business.
“In my book, gold should be a staple for anyone with a long-term perspective who is very concerned about quantitative easing fatigue, the debt levels around the world, the financial repression the world is going through and key event risks both politically and from a central bank perspective,” he said.
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Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.