"We are extremely bullish on gold and gold mining stocks. If gold takes out 2011 high near $1,900 per troy ounce, it will be blue skies," said Christopher Wood, the Global Head of Equity Strategy at Jefferies in an interview with CNBC-TV18.
It is just a matter of time before gold makes a new high, while silver will rally with a lag, he added.
The yellow metal hit a fresh 2011 high of $1,830 an ounce last week, but overall it has been hovering around $1,800 an ounce since the start of July amid hope that COVID-19 may delay the global economic recovery and the liquidity flow from global central banks may continue to boost their economies.
Chris Wood believes the lockdown hurt India more than the virus itself, though it was sensible to impose local lockdowns in certain places. "Allowing the economy to reopen is most important now," he said.
India continued its lockdown in all containment zones till July 15 to control the spread of the virus and a majority of containment zones are in key cities like Mumbai, Delhi, Bangalore, Pune etc, but the good thing is rural areas remained largely unaffected.
"IT & pharma are the central sectors, we don't expect them to be hit, but weak growth and an NPA cycle are big risks for India," Chris Wood said, adding there is going to be a cyclical recovery and autos will recover with it.
He believes housing & construction are the current exciting equity stories, but the lockdown has hurt revival of the property market. "Property market has been in a 9-year back market."
Globally, the re-opening/lockdown easing activates lifted the mood of equity markets causing a rally of over 30-40 percent from March lows.
That reopening narrative will keep equities in a positive trend, Chris Wood said.
"For me, the biggest risk for equities is that monetary easing may need to be called back, and Central banks' actions are increasingly toward easing," said Wood who fundamentally prefers emerging markets (EMs), but he feels EMs would take their cues from the US.
He is overweight on China for the next 10 years. "Chinese companies listed in the US are relisting in Hong Kong."
From the second half of June, the United States saw a sudden spike in COVID-19 infections and that has been rising with a daily count around 60,000.
"COVID-19 cases are rising in the US, but not the death rate. The surge in COVID death rate would hit the market very hard," Wood said.
My base case is that COVID-19 is in the process of burning itself out, he added.
The US market has been in a northward trajectory on the back of further progress in the vaccine, with Dow Jones rallying 44 percent from its March lows.
"I think the vaccine will create a lot of short-term volatility. Vaccine story is pure hype, we don’t think we need a vaccine," Chris Wood said.
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