Anthem Blanchard: Real driver of higher gold prices still intact

Anthem Blanchard: Real driver of higher gold prices still intact

Anthem Blanchard: CEO of Anthem Vault

On Monday gold futures continued to drift lower in anticipation of an end to the US Federal Reserve's economic stimulus program, slipping back from a six-week high reached a week ago.

The gold market has been unpredictable this month, hitting a high of $1,255 an ounce last Tuesday after a sharp recovery from the 2014 sub-$1,200 low early in October.

Anthem Blanchard, CEO of online gold and silver retailer Anthem Vault, tells MINING.com while the Fed's quantitative easing program may be winding down the European Central Bank will be picking up the baton.

A number of EU countries are on the verge of slipping back into recession and the ECB has already embarked on some asset purchases in France, the bloc's second largest economy.

A cautious Fed, QE by the ECB, continued currency creation in Japan and the possibility of fresh economic stimulus in China mean global interest rates won't rise in any meaningful way for the foreseeable future says Blanchard:

"The foremost driver of gold prices – negative real interest rates – will continue to be with us for a long time. A rapid rise in interest rates will deliver too much of a shock to the financial system. The notion that central bank programs and policies will fix everything has taken a firm hold on financial markets."

Blanchard is an ex-director of $2 billion European trader GoldMoney and scion of James U. Blanchard III, who helped restore Americans' right to own gold 40 years ago.

Given the close relationship between recent Fed policy and the price of gold perhaps it's apt that the keynote speaker at the 40-year commemoration of the event in New Orleans, is previous Chairman Alan Greenspan.

Blanchard says he's somewhat surprised gold is not higher than it is today despite massive intervention by central banks: "Hyperinflation is not happening but that's because all the money is still sitting on the sidelines."

Blanchard expects gold to remain rangebound between $1,200 and $1,300 an ounce through the end of this year.

With so many forces pulling the metal in different directions it is not a radical forecast, but it's significantly higher than the predictions of many investment banks, adds Blanchard.