Gold is off its recent highs, but Frank Holmes of US Global Investors says the bull trend is very much intact.
Gold is actually a seasonal investment, says Holmes. In the first sixth months of the year, investors focus on the "fear" trade--the hope that gold will insulate investors from carnage in other assets (or the fear that investing in gold will clobber them).
In the second half of the year, however, investors begin to focus on the "love" trade--the season in which people around the world start thinking of giving the metal as gifts (in the shape of jewelry).
The love trade, says Holmes, should drive gold higher by the end of the year.
And the long term?
Gold prices could double in five years, says Holmes. The supply of paper money is exploding, while the supply of gold itself is growing quite modestly. So when you project out those trends, the outlook for gold as investment is still promising.
And Holmes just one of those gold bulls who only like gold because of some religious devotion to it --or because it's going up?
No way, says Holmes! The fundamentals really do suggest that gold prices will pretty much only go up.
- Frank Holmes