Is the Gold Rush Over?

I appeared on CNBC’s “Street Signs” yesterday to discuss why I think the gold market is just taking a breather from a gradual move higher.

Host Erin Burnett pointed to the people who’ve embraced gold for fear of Armageddon or runaway inflation, but I’m not one of those gold investors. As I explained to her, gold has pushed higher through a deflationary cycle of currency debasement.

When you go back and look at the drivers, gold doesn’t have to go up because of inflation. It can go up as I’ve said many times for many years on your program, it’s going up on deflation. And whenever you have big currency instability, either big inflation or deflation, gold starts to perform as an attractive asset class.

And the other key factor and all the research shows that whenever we have negative interest rates and you have big deficit spending, gold starts to perform as real money.

The World Precious Minerals Fund (UNWPX) was first in total return among all U.S. gold-oriented mutual funds and exchange-traded funds for the year ended December 31, 2009. The fund was ranked #1 of 71, #34 of 51 and #18 of 29 among gold-oriented funds by Lipper for the 1-, 5- and 10-year periods ended December 31, 2009. The fund was ranked #3 of 74, #35 of 52 and #19 of 31 among gold-oriented funds by Lipper for the 1-, 5- and 10-year periods ended March 31, 2010.

The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. Diversification does not protect an investor from market risks and does not assure a profit.

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About Frank Holmes 282 Articles

Affiliation: U.S. Global Investors

Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc., which manages a diversified family of mutual funds and hedge funds specializing in natural resources, emerging markets and infrastructure.

The company’s funds have earned more than two dozen Lipper Fund Awards and certificates since 2000. The Global Resources Fund (PSPFX) was Lipper’s top-performing global natural resources fund in 2010. In 2009, the World Precious Minerals Fund (UNWPX) was Lipper’s top-performing gold fund, the second time in four years for that achievement. In addition, both funds received 2007 and 2008 Lipper Fund Awards as the best overall funds in their respective categories.

Mr. Holmes was 2006 mining fund manager of the year for Mining Journal, a leading publication for the global resources industry, and he is co-author of “The Goldwatcher: Demystifying Gold Investing.”

He is also an advisor to the International Crisis Group, which works to resolve global conflict, and the William J. Clinton Foundation on sustainable development in nations with resource-based economies.

Mr. Holmes is a much-sought-after conference speaker and a regular commentator on financial television. He has been profiled by Fortune, Barron’s, The Financial Times and other publications.

Visit: U.S. Global Investors

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