Robert Griffiths has been working in finance for about 30 years and during this time has gained an outstanding reputation. His technical analyses are highly valued among investors. After having worked at HSBC for 20 years, he joined the respected capital management firm Cazenove Capital in 2008, where he now works in the wealth management division. Griffiths believes that many analysts and journalists in the western financial world have not yet understood why precious metals, and especially gold and silver, have once again become very popular investment classes. According to him, their thinking is too much influenced by the Keynesian economic theory, a theory he expects to be thoroughly tested in the foreseeable future.
Griffiths states that often analyses and media reports about precious metals are characterised by a negative undertone, especially with regards to gold. If nothing else works, authors like to reference Warren Buffet’s statement indicating that the storage of gold is too expensive and moreover does not generate any interest. However, many journalists were disregarding the fact that international investors have been engaging strongly in the precious metals sector since 2001, after long decades of abstinence. According to Griffiths, the main boost for the long lasting bull market stemmed from the central banks’ flooding of the financial markets with liquidity. He assumes that the financial markets have already come to the conclusion that an increasing number of colorfully printed bank notes could eventually lead to a galloping inflation. The real problems would become apparent, when the average person began to understand this development.
In this context Griffiths attestes the Asian states a lead over the western industrialised countries. Over the last decades especially Asia’s emerging countries had often experienced weekly climbing food prices and seen the consequences such developments could have. For this reason the demand for precious metals has always been high among Asians. This was particularly valid for countries such as India, China or Vietnam. A great part of the population of these countries had grasped the significance of gold and silver and had therefore been exchanging its paper money for precious metals for some time. The most recent developments showed that China has further deregulated its gold market and encouraged its population to purchase precious metals. On the other hand, Vietnam’s communist government has tried to fight a flight into gold in order to prevent a further erosion of its national currency. Griffiths’ forecasts predict that China is about to increase its current gold reserves from 2 percent to 10 percent in the foreseeable future. He expects that the gold price will therefore always be supported by new buyer interest after a correction, which would underpin the yellow metal’s future price development.