Paul de Sousa: “Massive Loss of Confidence” Would Move Gold, But When?
After a year that left some investors disappointed, will gold take off in 2022?
Paul de Sousa, senior vice president and investment advisor at Sightline Wealth Management, said he sees a major price rise in the yellow metal’s future — but he doesn’t see it happening this year.
In de Sousa’s opinion, gold will likely stay fairly rangebound in 2022, trading between US$1,700 to US$1,850 per ounce or so. The precious metal has spent the first two weeks of the year trading near the higher end of that span.
“I don’t think this is the real rise yet,” said de Sousa. “I think the real rise will come during a massive loss of confidence, and it’ll happen very quickly. And so I don’t quite see it (in 2022).”
When asked what a crisis of confidence could look like, de Sousa said to imagine an environment similar to March 2020, when COVID-19 began to spread in earnest, but with a different cause. For example, trouble could be brewing in the over-the-counter derivatives market, much of which is sensitive to rising rates.
“That’s kind of one of my theories (on) why I don’t think interest rates will rise too high, just because of how sensitive the over-the-counter derivatives market is to rising rates,” he explained.
“If 85 percent are interest rate sensitive, that would cause such massive turbulence throughout the world. It would be felt everywhere. To me that’s my bet in terms of if you’re going to see a significant rise in gold — it’ll be something to do with some kind of derivatives meltdown,” added de Sousa.
He believes investors still have the opportunity right now to get into gold at a good price, and noted that it’s important to do so before there’s a crisis situation. “Just buy it now when it’s relatively calm … don’t worry about it, you’re going to own this for a long time,” he said during the interview.
Watch the video above for more from de Sousa on gold and the markets.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
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