(Kitco News) – Geopolitics will remain one of the key themes this year, with U.S. President Donald Trump taking some issues head-on with “game theory,” said U.S. Global Investors CEO Frank Holmes, noting that gold could hit $1,500 level in a “blink of an eye.”
Whether one agrees with Trump or not, the President’s use of game theory when it comes to geopolitics is impressive, Holmes told Kitco News on the sidelines of the Vancouver Resource Investment Conference (VRIC).
“What you have to really be impressed with is Trump[’s] … use [of] game theory. So, if you have a Ph.D. in game theory, you can look up at him and say that he’s going to win. And what he did with a trade war with China by first test[ing] the waters with North Korea,” Holmes said. “I think we’re going to have lots of excitement as geopolitical events unravel.”
On top of the hard-to-predict geopolitical situation, the gold market has been showing extreme resiliency in light of higher U.S. dollar and higher rates.
“Rising interest rates is always a difficulty. It was unbelievable how well gold held up when the U.S. had the highest real interest rates in the world,” Holmes pointed out. “Japan’s offering you negative rates in return, Europe is offering negative rates of return and only the U.S. [is tightening.] And that differential usually means a much stronger dollar, a much weaker gold price, but that didn’t happen.”
This is a clear sign for Holmes that prices could rally at any minute, especially if the Federal Reserve adopts a more dovish stance this year.
“So that’s why any type of a drop in rates now, [would see] gold [jump] in a blink of an eye to $1,500,” he said.
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