Even as gold prices close in on record intraday highs, Mark Mobius expects the precious metal to rally further. The popular safe-haven investment climbed at the start of the summer as a resurgence of US coronavirus cases and fears of a prolonged recession drove investors to safe havens. With interest rates sitting near zero and uncertainty looming over markets, "gold is an attractive medium to have," Mobius said. "I would be buying now and continue to buy." Gold could rally even further if the coronavirus disrupts mining activity and the global supply chain, Mobius added. Watch spot gold trade live here.
Spot gold only needs to gain about 1% for it to set a record intraday high. But Mark Mobius, co-founder of Mobius Captial Partners, still sees a buying opportunity for the precious metal. Gold prices have skyrocketed in recent weeks as rising coronavirus cases and expensive stock valuations entice more investors to hedge for a correction. The metal's rally has also been fueled by unprecedented easing. Near-zero rates, forecasts of heightened inflation, and central bank asset purchases bolstered gold's value against the dollar through 2020. Expectations for a lengthy economic recovery and lasting virus damage make the case for buying gold even stronger, Mobius said Friday. "When interest rates are zero or near zero, then gold is an attractive medium to have because you don't have to worry about not getting interest on your gold, and you see the gold price will rise as uncertainty in the markets are rising," he said on Bloomberg TV. "I would be buying now and continue to buy. Gold is really on a run I think." Read more: Bernstein says buy these 13 dividend-rich stocks built to capitalize on a trend not seen in 65 years The commodity tore above its previous record close on Thursday and maintained its upward trend in Friday trading. Gold now sits roughly 25% higher year-to-date. The metal's rally accelerated in recent weeks as new economic risks arose. New virus hotspots across the US led several states to reinstate lockdown measures. Economic data covering the first weeks of July show consumer sentiment and spending activity worsening after May and June improvements. Most recently, new tensions between China and the US revived fears of a tit-for-tat conflict between the economic superpowers. Mobius sees traders heeding the risks and turning to gold in case the economic backdrop sours further. "We're in a very interesting situation where people are looking at stocks to preserve their capital — because stocks will adjust to inflation — and also gold. So they're sort of hedging their bets," Mobius said. Read more: What 6 of Wall Street's biggest firms are saying about the election's implications for unusually tense investors — and their strategies for gains no matter the results The legendary investor sees supply constraints potentially driving gold prices even higher. Gold mines were likely affected by the pandemic. With demand for the popular hedge soaring around the world, supply chain disruptions could benefit those who buy early enough, Mobius said. "With this COVID, I assume that mine outputs should be declining for gold. That of course puts additional pressure upwards on the price," he said. Spot gold traded at $1,902.22 per ounce as of 11:05 a.m. ET Friday. Now read more markets coverage from Markets Insider and Business Insider: US stocks drop after China escalates tensions with consulate order Wall Street giants urge Congress to fast-track 'expensive' stimulus bill before recession worsens Jason Tauber is crushing the market this year by finding the tech companies enabling the biggest disruptions. He told us how he's adjusting his game plan as valuations soar — and 7 of his top picks today.Join the conversation about this story » NOW WATCH: Why thoroughbred horse semen is the world's most expensive liquid
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The Federal Reserve’s latest economic forecasts suggest that interest rates will remain near zero at least...The Federal Reserve’s latest economic forecasts suggest that interest rates will remain near zero at least through 2023.
Stock investors could be 'delusional' if prices continue to rise faster than earnings forecasts, Ed Yardeni says
Stock valuations are soaring ahead of profit expectations, and investors should "come to their senses" and...Stock valuations are soaring ahead of profit expectations, and investors should "come to their senses" and let prices cool, Ed Yardeni, the president of Yardeni Research, said in a Monday note. The S&P 500's forward price-earnings ratio climbed to 22 on Friday, landing about 3 percentage points above the cyclical peak in mid-February. Stock investors might be "delusional" if prices continue to outpace profit forecasts, Yardeni said. Economic risks sourced from stalled stimulus talks, closed schools, and rising COVID-19 cases serve as additional reasons stock buyers should wait for a more sustainable rally, he added. Visit the Business Insider homepage for more stories. Investors should "come to their senses" and give the stock market some time to slow its roll, Ed Yardeni, the president of Yardeni Research, said Monday. Equity prices are outpacing expectations for near-term profits, forming a price-earnings melt-up many have likened to the dot-com bubble of the late 1990s. The rally grew even more vulnerable through the start of earnings season as analysts' earnings estimates fell. The S&P 500's forward price-earnings ratio climbed to 22 on Friday, about 3 percentage points above the cyclical peak seen in mid-February. The index's forward price-sales ratio recently flashed a similar warning sign. The metric reached a record 2.32 in the week that ended on July 16, handily beating its past two cyclical highs. Investors could be in for a world of hurt if the decoupling of prices from profit forecasts carries on, Yardeni said. "Are stock investors delusional? Not yet, but that could be an apt characterization of stock prices continue to rise faster than forward earnings," he wrote in a note to clients. Read more: 'Castles built on sand': Famed economist David Rosenberg says investors are being too reckless as stocks rally — and warns that a vicious long-term bear market is far from over Various economic risks also threaten the run-up, the strategist said. The US economic recovery could be slowed or even derailed by rising COVID-19 cases or a failure to pass additional economic stimulus on time. Separately, a shift to online classes for schools could create "a serious problem for parents' ability to return to work," Yardeni said, adding that another semester of online classes at colleges would slam nearby small businesses. The looming economic dangers and overextended valuation metrics give investors even more reason to grow cautious of stocks' steady uptick. While the Federal Reserve "continues to keep the wild party going" with its various liquidity-boosting policies, it shields investors from "the harsh reality of the health crisis" and its economic fallout, Yardeni said. "There's certainly mounting evidence that the V-shaped economic recovery during May and June is slowing or even stalling in July," the strategist said. "That could lead to more delinquencies and defaults on loans and bonds." Now read more markets coverage from Markets Insider and Business Insider: US consumer confidence snaps 3-month winning streak as new COVID outbreaks stifle reopening optimism US stocks decline as investors weigh GOP stimulus plan and earnings disappointments A fund manager who's quadrupled investors' money since 2011 says he uses a famed 5-part psychological theory to shape his portfolio. Here are the stocks he bought for each stage.Join the conversation about this story » NOW WATCH: How waste is dealt with on the world's largest cruise ship