Buy Gold ‘At Any Level,’ Mobius Says as Central Banks Cut Rates

Ranjeetha Pakiam and Haslinda Amin, Bloomberg News

An employee holds a gold bar weighing 12.5 kilograms in the precious metals vault at Pro Aurum KG in Munich, Germany, on Wednesday, July 10, 2019. Gold rose for a third day after the Federal Reserve indicated that it’s preparing to cut interest rates for the first time in a decade as the global economy slows. , Photographer: Michaela Handrek-Rehle/Bloomberg

(Bloomberg) -- Veteran investor Mark Mobius gave a blanket endorsement to buying gold, saying that accumulating bullion will reap rewards over the long term as leading central banks loosen monetary policy and the rise of cryptocurrencies serves only to reinforce demand for genuinely hard assets.

“Gold’s long-term prospect is up, up and up, and the reason why I say that is money supply is up, up and up,” Mobius, who set up Mobius Capital Partners LLP last year after three decades at Franklin Templeton Investments, told Bloomberg TV. He added: “I think you have to be buying at any level, frankly.”

Gold hit a six-year high this month on prospects for easier monetary policy from the Federal Reserve and other central banks to support growth that’s been impacted by the prolonged trade war between the U.S. and China. With the U.S. Treasury market signalling that a recession may be on the horizon, investors have been swarming into bullion-backed exchange-traded funds.

“With the efforts by the central banks to lower interest rates, they’re going to be printing like crazy,” said Mobius, who recommends allocating about 10% of a portfolio to physical bullion. In the interview on Tuesday, he didn’t spell out a price target for gold in his on-air remarks.

The increasing role of digital currencies such as Bitcoin has spurred a debate in the precious metals market both about their intrinsic worth, and whether their rising popularity will detract from traditional haven gold. For Mobius, their advent will actually boost bullion consumption.

“You have all these currencies, new currencies coming into play,” he said. “I call them ‘psycho currencies,’ because it’s a matter of faith whether you believe in Bitcoin or any of the other cyber-currencies. I think with the rise of that, there’s going to be a demand for real, hard assets, and that includes gold.”

Spot gold -- which hit $1,535.11 an ounce on Aug. 13, the highest since 2013 -- traded at $1,496.47 on Tuesday, and is up 17% this year. Mobius correctly predicted in early July that prices would top $1,500.

To contact the reporters on this story: Ranjeetha Pakiam in Singapore at rpakiam@bloomberg.net;Haslinda Amin in Singapore at hamin1@bloomberg.net

To contact the editors responsible for this story: Phoebe Sedgman at psedgman2@bloomberg.net, Jake Lloyd-Smith, Keith Gosman