Gold Correction Not Collapse: Vallum Sees Big Rally Ahead

Investment firm Vallum Capital believes that the recent correction in gold prices is not a collapse, but rather an opportunity for another big rally. According to Vallum's analysis, the metal's supply response has been remarkably muted despite its spectacular run.

The firm points out that US real yields have turned and the dollar is reversing, both of which are positive signals for precious metals. Central banks are also buying gold at an extraordinary pace, with a record 288.9 tonnes purchased in the second quarter of this year, up 411% from the previous quarter.

Vallum argues that the current market conditions create a long-term case for holding physical gold and silver, as the enormous gap between scarce physical gold and expanding money supply and debt cannot be manufactured at the same pace. The firm estimates that all the gold above ground is worth roughly $31 trillion, compared to around $102 trillion in major central-bank money supply and $350 trillion in global debt.