My five-year price target on gold is $10,000 U.S./ounce. You may think this is crazy, and I may indeed be way off, but there are simply too many bullish drivers of precious metals right now for me to think otherwise. I’ll discuss my reasons for this rally more in this article.
First, gold is bullish in both a deflationary and hyper-inflationary environment. The modest inflation we saw during the recent decade-long bull market was overly bearish for gold, and we saw this reflected in the price of gold. I don’t think we’re going to see another bull market like this for quite a while, so this risk is seriously diminished.
In the near-term, I see COVID-related concerns and a heightened demand for portfolio hedges pushing gold well above the U.S. $2,000/ounce level. We’re in the midst of a deflationary spiral right now, denoted by the fact we haven’t seen inflation pick up despite trillions of dollars of liquidity being pumped into the financial system. This is very bullish.
These trillions of dollars of monetary and fiscal stimulus need to continue, which is likely to fuel high levels of inflation down the road when this money is eventually released to the public by banks that have been hoarding cash.
This high-inflation environment is also extremely bullish for gold, as is a deteriorating U.S. dollar which I see as likely as well.
Invest wisely, my friends.
