"Investors are losing confidence in central banks"

The increase in the Gold price is driven by investors who are starting to lose confidence in central banks, according to Jake Klein of gold mining company Evolution Mining in an interview with Bloomberg. He sees that more and more investors are doubting the ability of central banks to deal with the economic problems of our time and that for this reason Buy gold.

"The demand for a safe haven like gold seems to be a result of what people are doing right now, and that is the loss of confidence in the ability of central banks to get us through this crisis.", concludes Klein, director of Australia's second largest gold mining company. "Gold is now getting more attention from people who have generally been negative about the precious metal in recent years."

Rise in gold price

The price of gold in dollars has already risen by more than 15% this year, while the price in euros has shot up by almost 13%. This makes the yellow metal the best-performing commodity in the Bloomberg Commodities Index.

Turmoil in the financial markets, worries about the banking sector and gloomy growth expectations for the global economy are driving demand for gold. Central banks in Europe and Japan are pushing for more negative interest rates, while the Federal Reserve hints that they too could introduce negative interest rates if circumstances call for it.

Central banks

Investors are skeptical about a further interest rate hike in the US and think this is a good time to buy gold. Jake Klein, who has held a leadership position in the mining sector for nearly two decades, notes that all financial markets and asset classes have become highly sensitive to central bank policies.

The prospect of interest rates remaining low for longer or even falling further is very positive for gold, as are the stimulus programs of several central banks. Attempts to boost inflation have so far yielded little success. The ECB is even considering buying bad loans from banks, a sign that they still don't have the situation under control.

New interest in gold

Due to the recent stock market decline, awareness of gold as a safe haven is also growing among the general public. Klein also notices this: "It seems as if people are rediscovering gold as an investment object, even by people who have had no interest in it in recent years."

The gold mining sector has also been given some breathing space by the rise in the gold price. For example, Evolution Mining's stock has already risen by 30% since the beginning of this year. At the time of writing, the GDX, an index of large gold mining stocks, is even 37% higher than at the beginning of this year.

Director of Evolution Mining: "Investors are losing confidence in central banks"