Fed Skeptics Seek Gold Safe-Haven As Bullion Bears Capitulate

Gold is having one of its best starts to a year in history as investors start to lose faith in central bankers’ ability to deal with economic challenges. Fed skeptics as well as capitulating bullion bears are being drawn to the precious metals as Bloomberg reports,

“The safe-haven demand appears to be where people are focused on, and that is on a loss of faith in central banks being able to manage through this period,” said Klein, executive chairman of Australia’s second-biggest producer.

Bullion is “certainly getting more attention from people who have generally been bears over the past few years,” Klein said in a phone interview.

Even with the weakness of the last few days, Gold is still up 15% YTD – the best in at least a decade…

Prices have gained as investors scaled back expectations for tighter policy from the Fed…

“There seems to be general skepticism now, both from the Fed’s language and from market participants, as to whether that’s going to be possible,” said Klein, who’s been a gold-industry executive for about 20 years.

“All the financial markets, and all the asset classes, seem to be highly sensitive to central-bank policy.”

Gold’s standout year is also driving some long-term bears to capitulate… (as Bloomberg details)

For years, ABN AMRO Group NV’s Georgette Boele has been a staunch bear on gold as prices tumbled. Now with gold on the brink of a bull market, she’s changed her tune.

Boele changed her year-end forecast to $1,300 an ounce from $900, according to report released Tuesday.

ABN Amro is becoming more pessimistic about the global economy, especially in the U.S., emerging markets and countries with exposure to oil. Boele no longer expects the Federal Reserve to raise interest rates this year.

“Having been long-standing bears we have now turned bullish on precious metal prices,” Boele wrote. “Our new scenario sees a longer period of weaker global growth.”

As Klein concludes, “it does seem like there’s a general review of gold as an investment sector by people who haven’t been interested in it for years.” And yet Goldman will still do its best to tell you to sell your gold (to them).