Investors Preparing For The End Of The Equity Bull Run And Turning To Gold – Will Rhind

Jun 4, 2019

(Kitco News) – Investor conviction in equity markets is starting to dissolve with the S&P declining 6.6% last month, its worst May performance in seven years and its second-worst going back to the 1960s.

Will Rhind, founder, and CEO of GraniteShares

Meanwhile, shifting investor sentiment will continue to support the gold market as it builds momentum for what one fund manager sees the re-emergence of a long-term uptrend.

Will Rhind, founder, and CEO of GraniteShares, said that he expects safe-haven demand will be a significant factor that will drive gold prices higher as investor search for non-correlated assets to equity markets.

“The volatility you are seeing in markets and the inversion of the yield curve is accelerating investors’ thinking that they need to look for ways to protect against further downside moves in equities and look for something that adds value to a portfolio,” he said.

Rhind’s comments come as gold prices surge to a two-month high as prices have broken above $1,300 an ounce. The market is being driven by growing fear sentiment in the marketplace, which has pushed U.S. 10-year bond yields to a nearly two-year low and dragged the U.S. dollar to a one-week low. August gold futures last traded at $1.323.70 an ounce, up almost 1% on the day.

Investor interest in gold is starting to pick up after a somewhat lackluster performance during the last two months. However, although many investors have been shunning gold, GraniteShares has seen steady growth in its low-cost gold-backed ETF, GraniteShares Gold Trust (NYSE Arca: BAR). Last month, the relatively young ETF, which launched less than two years ago, saw its asset under management surpassed $500 million.

Rhind added that he continues to see the potential for the gold ETF market.

“We think risks in equity markets are skewed to the downside during the summer and we are seeing flows into BAR reflect that ‘risk-off sentiment’ as investors look to position their portfolio more defensively,” he said.

Along with growing uncertainty and volatility in equity markets, Rhind said that falling bond yields will also continue to support gold prices. He added that with markets pricing in rate cuts for the rest of the year, he does not expect to see a rise in 10-year bond yields, which in turn will keep real yields low.

“What is interesting is if you look at the probability of a rate hike this year, the probability is zero per cent for every single month for the rest of the year,” he said. “The market is saying there is a 100% of a cut, the only question when and by how much.”

By Neils ChristensenFor Kitco News

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