Frank Holmes: Gold Advice as Price Falls — Buy the Dip and HODL
The gold price has tumbled since last week’s US Federal Reserve meeting, which saw the central bank raise rates by 50 basis points for the first time since 2000 in an effort to combat inflation.
Speaking to the Investing News Network, Frank Holmes, CEO and chief investment officer at US Global Investors (NASDAQ:GROW), pointed out that the yellow metal’s decline is a buying opportunity.
“Buy the dip and hold on for dear life, as the crypto kids say — HODL,” he said. HODL is a term that originated in the cryptocurrency community, although it’s since gained mainstream usage through popular memes.
Even as the gold price dips, Holmes said that physical demand for the yellow metal is high, and gold companies continue to produce strong results. “A lot of the gold stocks are doing well — 60 percent of the gold producers have free cash flow,” he said, noting that this is a crucial element for him.
In terms of inflation, Holmes pointed out that it’s much higher than official numbers suggest.
“The cost for anything has just gone up dramatically. I believe that … if you use the 1980 Consumer Price Index indicator, inflation is at 15 percent. It’s not 8, 9 percent,” he said. However, Holmes noted, the market is anticipating that rates can’t be raised too much since midterm elections will be happening later this year.
Outside the US, Holmes is watching China closely to see when COVID-19 lockdowns are relaxed.
“What’ll happen is that when they open up their floodgates it’s going to be like every other thing — there’s huge binge demand,” he said. He expects this eventual demand to create problems with supply chain balance.
“I think when China opens up, buy every commodities stock that has real reserves in the ground in a safe jurisdiction, because I think they just pop like we’ve never seen before,” Homes said.
Watch the interview above for more of his thoughts on gold, bitcoin and more.
Don’t forget to follow us @INN_Resource for real-time updates!
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.