by Mark O’Byrne
“Gold will likely soar to a record within five years as asset bubbles burst in everything from bonds to credit and equities, forcing investors to find a haven”, reported Bloomberg last week, quoting Old Mutual Global Investors’ Diego Parrilla. […]
The metal is at the start of a multi-year bull run with a “few thousand dollars of upside” in a world of “monetary policy without limits” where central banks print lots of money and low or negative interest rates prevail, said Parrilla, who joined the firm as managing director of commodities last month. He’s worked at Goldman Sachs Group Inc. and Bank of America Merrill Lynch.
“As some of the excesses in other asset classes get unwound, gold will perform very strongly,” said 43-year-old Parrilla, who has almost 20 years experience in precious-metals markets. The “perfect storm scenario will mean that gold will perform best when other classes are doing worst.”
While gold has climbed 24 percent this year amid low or negative rates, it slumped more than 40 percent from its record in 2011 through the end of last year to what Parrilla called “very oversold, very distressed” levels. With the downside only a few hundred dollars, the risk-to-reward ratio is extremely asymmetric and skewed to the upside, he said in an interview on Sept. 14.