The US Federal Reserve has been hiking interest rates for a year now in a bid to tame inflation, and during that time experts have questioned whether its aggressive hikes may break something in the market.
Speaking to the Investing News Network, Will Rhind, CEO of GraniteShares, said that time has come.
“The short answer is yes, absolutely. Bank runs are something that you really don’t see often, and clearly when you have a situation where you have not just bank runs, but bank failures, that tells you that something is broken,” he said.
Rhind was referring to the recent collapse of Silicon Valley Bank and Signature Bank, along with UBS’ (NYSE:UBS) planned acquisition of its failing rival Credit Suisse (NYSE:CS). These and other related events have created major turmoil, which has sent the gold price soaring — the yellow metal is a traditional safe haven, and tends to react well during unrest.
“We can talk about the dollar, we can talk about real interest rates and we can talk about all these other factors that influence the price of gold. And they all are important, and they do influence gold over the long term,” Rhind said.
“But there’s nothing that influences it more than fear, and what we’ve seen this week is fear. And that means that people have come out buying gold, aggressively looking for hedges — trying to preserve capital, protect capital in this particular environment. In those circumstances, that to me is just the most important role that gold has. It is that hedge, it is that asset of the highest quality with no credit or counterparty risk. Gold is not going to do a Silicon Valley Bank on you, and that’s important to remember.”
Other precious metals like silver, platinum and palladium are seeing interest too, as is base metal copper. “Right now, I think this is an environment where the price of gold is going up and it’s lifting all metals,” noted Rhind.
Watch the interview above for more of his thoughts on the current market turmoil and what’s next for gold.
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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.