Veteran strategist Jeff Currie has flipped his gold position from short to long, betting on continued central bank buying over the long term. He says the selling that drove gold's worst quarter in 13 years was driven by temporary cash needs.
Jeff Currie, chief strategy officer at Altis Partners and senior advisor at Carlyle, has turned bullish on gold after months of betting against it. Central bank demand, he says, remains resilient enough to keep the metal on a long-term upward path even as short-term volatility continues.
A pivot built on central bank demand
An enormous rally in bullion since 2022 has been fueled largely by heavy buying from central banks in emerging markets, including China, Turkey, India and Poland. But a pivot by many of those countries toward selling gold earlier this year contributed to the metal's worst quarter in 13 years in the three months to the end of June.
Currie told CNBC's "Squawk Box Europe" on Monday that the dynamics behind that sell-off were transient. He pointed to the Strait of Hormuz blockade, which left Middle East countries unable to export oil or raise cash, forcing them to sell gold instead. According to CNBC: "You sell what you can, not what you want to," he said. Emerging markets faced the opposite problem, needing to raise cash to buy oil and selling gold to do it, he said.
Diversifying away from sanction risk
Over the longer term, Currie sees central banks buying gold to diversify their reserves away from assets that could be frozen or subject to sanctions by another country. He said major fiat currencies such as the U.S. dollar, a conventional reserve currency for central banks, have weaker and more uncertain prospects than gold.
A survey released in June by the World Gold Council showed central banks are increasingly storing their bullion reserves at home as they weigh geopolitical tensions and renewed inflation risks. Currie said gold is the safest bet for institutions looking to protect themselves from sanction risk or interference with their reserves.
Volatility likely to persist
Currie acknowledged that gold, silver and other hard assets will likely keep seeing elevated volatility. He said the pattern of spikes across these commodities should continue, but with each high and low landing above the last.
Source: CNBC
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