7 Reasons Why Doug Kass Is Buying Gold

Gold has had a great week. The precious metal has profited hugely from the move of the Swiss National Bank to decouple the franc from the euro. Gold saw the biggest weekly gain in 18 months and investors chose gold as a safe haven en masse. Doug Kass believes that this is not a crazy move and the director of Seabreeze Partners Management is bullish on the precious metal for many reasons.

Doug Kass already wrote earlier in January that the global economy is struggling with structural headwind and that currencies are also in trouble. Geopolitical risks are on the rise, in his opinion, and monetary policy is losing its effectiveness. That is why Kass believes that gold – a commodity he has long been avoiding – is ready to rise.

Although the expert thoroughly admits it is not very easy to determine how much gold is actually worth today, he plans to keep gold in his portfolio regardless because the uncertainties in the market and the economic environment. He has 7 reasons for why he recently strengthened his long position in gold:

Why Doug Kass Is Buying Gold:

1. Gold could increase in value as a method of payment because of currency issues.
2. Central banks globally are doing everything to devalue their own currency. This will make that only one currency will benefit from this and that is the one that central banks cannot manipulate: gold.
3. The Swiss National Bank threw in the towel on printing fresh cash. The bank realizes that it is a battle that cannot be won and all of this works in gold’s favor, of course.
4. India has made import restrictions for gold more flexible a few months back. The expectation is that this will point to lower import prices.
5. China remains a large consumer of gold and the trend where gold is moving from West to East continues.
6. Russia understood that keeping more gold in its reserves will be key if it wants to stabilize its currency.
7. The Federal Reserve has expressed its concern with regards to the impact of a stronger dollar and they will be the last central bank to enter the currency war. Gold is amidst a rally against all currencies and it is no longer a non-dollar play.