Time To Buy Gold As A Hedge Against “Extreme Financial Deleveraging” Credit Suisse Says

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It’s been a while since Wall Street banks recommended anything to do with either gold or gold stocks, but in a surprising reversal, last week one of Wall Street’s biggest bulls Credit Suisse said that the time has come to use gold stocks as a risk off diversifier, while seeing material upside for the precious metal.

Here is why CS’ global equity strategist Andrew Garthwaite, believes that it is now time to buy gold:

  • First, according to Garthwaite, the valuation of gold stocks is abnormally cheap on both P/E – trading at a 25% discount to the broader market vs a 30% premium normally, and also cheap on a price-to-book basis relative to the market
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  • Looking at individual stocks, Credit Suisse writes that its “outperform”-rated stocks which screen cheap and have positive earnings revisions are: Newcrest Mining, Newmont, Endeavour Mining, Perseus, Regis Resources, St Barbara, Agnico Eagle Mines, Barrick Gold, Kinross Gold, Yamana Gold
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As for the metal itself, the Swiss bank notes that gold is also at the bottom end of its 10-year range against silver or industrial commodities and 20% below its 2011 peak in real terms.



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