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'Gold Gives You Nothing' Amid High Inflation: Analyst

The price of gold has fallen, with the CBOE gold index hitting a new 52-week low recently, and Stuart Oakley, head of emerging markets FX Trading at RBS, told CNBC that the gold trade is over for now.

Gold
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Gold

“I think it is going to be very difficult to recapture those old highs that we’ve seen in months gone past,” Oakley said.

Charlie Morris, HSBC Global Asset Management, disagreed with Oakley.

“It [gold] has been lacking since September, but in long-term view it’s quite bigger than that,” Morris said.

Gold came into 2011 at $1,300, and it is currently trading at around $1,650. Morris pointed to this growth as a sign of a strong uptrend. He also cited negative real interest rates as an indicator of future growth.

“Depending where you are, negative interest rates are around negative 2.5 percent. Historically, a real interest rate below 2 percent is a very positive environment for gold,” Morris said.

Oakley cited current global inflation to support his bearish claim against gold. “There is inflationin the world right now, so investors need a return,” Oakley said. “They need to pick up some yields somewhere or some kind of dividend, which many stocks give you—gold gives you nothing.”

Morris and Oakley agreed that gold is not in the short-term bull market at this time, but Morris is confident that goldwill regain its strength.

“It was very overbought in September, but the same situation happened in ’06 and ’08. On both occasions it took 18 months to flush out,” Morris said. “I think we’ll certainly get a new high in the gold market—It ain’t the peak yet. Bull markets don’t die with a whimper.”