Davies thinks Japan’s structural financial problems and debt burden are beyond recourse, and sees a “non-negligible risk of hyperinflation.”
In light of this, he says, Japanese investors are turning to gold:
I suspect that Japanese pension funds, insurance companies, banks, although they have to buy government bonds as almost a public edict because they can’t place the bonds, but talking to managers, there are switches going into the precious metals market. They are definitely buying up gold. Pension funds are doing that (buying gold).
In the short term, Davies believes the slowing growth of the Chinese economy will adversely impact gold, but any losses will be more than recovered by the Chinese New Year and a robust Indian wedding season.
Though the market has been relatively stable, Davies is bullish on gold and has a target in mind:
So I really think that the market feels very quiet at the moment, but I think the complacency is very much apparent in the pricing of volatility. I maintain that we will be knocking on $2,000 by the end of the year into January time. That’s the thought process.
Read more at KingWorldNews.com.
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