Gold’s investment case has been strengthened by the U.K.’s vote to quit the European Union as the fallout may spur the world’s central banks to step up easing, hurting currencies and favoring bullion, according to Marc Faber, publisher of the Gloom, Boom & Doom Report.
The U.S. Federal Reserve may even embark on a fourth round of quantitative easing, or QE4, Faber said in an interview on Bloomberg Television on Wednesday, adding that he typically buys bullion every month. While he also likes gold shares, they need to correct first after recent gains, he said.
Gold has soared after the U.K.’s vote last week as investors seek a haven from financial turmoil and contemplate the possible implications, including additional steps from central bank policy makers in Europe, the U.S. and Asia. Holdings in bullion-backed exchange-traded products have swelled to the highest level since September 2013 as banks including Goldman Sachs Group Inc. have boosted their price forecasts.
‘Print More Money’
“If Brexit is used as an excuse, the central banks will print more money, QE4 in the U.S. is on the way and the depreciation in the purchasing power of currencies will continue,” Faber said in the interview from Hong Kong. “In that situation, you want to own some gold.”
Bullion for immediate delivery rose as much as 0.7 percent to $1,321.55 an ounce, and traded at $1,321.24 at 1:57 p.m. in Singapore, according to Bloomberg generic pricing. In the immediate aftermath of the vote on Friday prices surged to $1,358.54, the highest in more than two years.
Gold has advanced 25 percent this year as the European Central Bank and Bank of Japan embraced negative rates to kick start growth and the Fed pauses after its first hike since 2006 last December. The U.S. central bank undertook three rounds of quantitative easing starting in 2008 to overcome the impact of the global financial crisis.