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Park Avenue Numismatics
2742 Biscayne Blvd.
Miami, FL 33137
 
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Investors should have up to 10% in this 'hedge against the unexpected' says 'Godfather' of gold

Thursday, April 2, 2020

NEWS SUMMARY: Precious metal prices rose sharply Thursday following record high U.S. jobless data. U.S. stocks shrugged off downbeat employment while focusing on expectations Saudi Arabia and Russia will ease oil market pressures.

CNBC---George Milling-Stanley has sometimes been referred to as the 'Godfather' of the gold business. While at the World Gold Council, he was among a small group that helped create the SPDR Gold Trust in 2004, now the world's largest gold exchange-traded fund with over $50 billion in assets. He is now chief gold strategist at State Street Global Advisors. CNBC: What do you think will happen with gold prices in the next few months? Milling-Stanley: I am expecting gold to continue to make strides. Gold jewelry demand may drop, but I am expecting a large increase in investment. This is what happened in 2008: Jewelry demand dropped but gold investment increased. If you look at flows into GLD, we saw significant inflows - just shy of $1 billion in the last week. We have had $3.8 billion in inflows year to date. Coronavirus is going to continue to be a concern. Brexit is still an issue. There are problems in the Korean peninsula. Investors have shifted from, 'Is there going to be a bear market' to 'How long will the bear market last?' All of this is positive for gold. CNBC: The Federal Reserve is again expanding its quantitative easing program. Does this have any impact on gold pricing? Milling-Stanley: It likely will. When the Fed began its QE program in 2008, the Fed balance sheet went up. Gold went up 8% a year on average during that period from December 2008 to October 2014. CNBC: In the first few weeks of March, gold dropped about 15% along with the stock market. What was going on there? Milling-Stanley: Gold did what it was supposed to do in this sort of environment. It came to the aid of investors when other investments were going south. In order to meet margin calls, gold was there to be sold, and it was indeed sold. This happened in 2009 and in 2002. CNBC: And yet, gold bounced back again in the second half of March. Milling-Stanley Yes. Gold was sold, and then having done its job investors tend to buy it back again, so gold tends to recover. CNBC: What part of an investment portfolio should gold be? Milling-Stanley: Our research indicates anywhere from 2% to 10%, depending on your risk tolerance and liquidity needs." 

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