Evy Hambro, of BlackRock's Natural Resources Equity Team, has said following a recent gold price slump, gold's fundamentals remain strong and that the fall in price was driven by an outflow of "hot money".
Hambro noted that there has been no visible central bank activity as the price fell and that prices are now near the marginal cost of new supply.
Economist Detlev Schlichter thinks gold remains a sound investment:
The reason I own gold is not its chart pattern, but the diagnosis that the global fiat money economy has check-mated itself. After 40 years of relentless paper money expansion, dislocations in the system are so massive that nobody dares allow market forces to do their work – to price credit and risk according to available real savings, and the potential for real income generation, rather than according to the wishes of monetary central planners.
Equities are trading higher, while bonds are stable and inflation is (so far) not a problem. Gold feels like a dead weight. For most investors, it is hard to stand on the sidelines of a rallying equity market – they need to be part of it.
Central bankers are now enjoying a sweet spot, where their machinations boost equities sufficiently, but don’t yet affect inflation readings and don’t upset the bond market. This policy is not balancing the system. It is marginally adding to long-term problems. It feels good for now. But it won’t last.