Gold rose $23 Monday morning, September 14, from $1,940 to $1,963, before settling into the high $1950s, mostly based on a weaker dollar, which was in turn based on hopes of continued “quantitative easing” by the Federal Reserve when they meet this Tuesday and Wednesday. Gold futures also rose $13 last week. In addition, gold-backed ETFs rose for the ninth straight month in August, as 39 tons of bullion worth, $2.1 billion at market prices, were added to gold ETFs in August, with seven tons bought in Asia.
Major mainstream investment advisory services are now predicting gold prices more than doubling in the next 2-3 years. First of all, Bloomberg Intelligence “is not ruling out $4,000 gold by 2023,” noting that the gold bull market is “just beginning.” Despite silver’s recent surge – growing twice as fast as gold since spring – Bloomberg Intelligence senior commodity strategist Mike McGlone LAO predicts that gold will outperform silver in the second half of the year, due primarily to a weak economy and weaker dollar.
“Gold has the catalysts to maintain performance leadership into year-end, in our view,” McGlone wrote. “Central-bank rate easing and U.S. bond yields gravitating toward zero are solid underpinnings for gold, as is the potential for increased U.S. stock-market volatility approaching the presidential election.”
And now, Citigroup analyst Heath Jansen also sees gold in the $3,000 to $5,000 range, in a rise similar to gold’s bullish run in the 1970s up to its peak in 1980. “When investors are hungry for gold, the metal has a habit of rising exponentially, which has no parallel amongst metals,” he said, in a note to clients.
He then pondered what could drive gold above $5,000: “Given the historical role of gold as a storage of wealth, perceived devaluation in the purchasing power of fiat currencies translates into demand for what is essentially the ultimate global reserve currency. It is not illogical then, to ask what conditions are needed to drive gold up to and even past this level.”
With minimum gold targets of $2,500 in the next 15 months – and $5,000 at the peak, perhaps the glut of fiat money and avalanche of new federal debt could drive gold even higher as more investors pour into the gold market in the next few years. Now is the time to plant your stake in the gold and coin markets. Just remember that when gold goes up, more investors buy gold and then many move into the coin market often resulting in increasing demand and prices.