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August
11
2020

Gold To Surpass $3,000: VanEck
Simon Constable

If you think the recent price of gold is high, you ain't seen nothing yet, according to a veteran precious metals investor.

The price could easily rally by 70% to $3,400 a troy ounce compared to recent prices of $1,994.

Gold tends to perform well during times of economic uncertainty including when inflation jumps and when there is deflation, or a general fall in the price level of goods or services.

"[W]e believe this to be a deflationary cycle," said Joe Foster, veteran portfolio manager at investment company VanEck, in a company statement. "Both recent deflationary gold bull markets suggest that a price over $3,000 per ounce is reasonable." 

He continues:

• "If one believes, as we do, that the current central bank stimulus to fight the impacts of the COVID-19 virus, along with elevated levels of systemic risks, are similar to those during the global financial crisis, then $3,400 may be the target for this bull market.”

Current Gold Rally May Be Similar the One Seen From 2001 to 2008

Foster views the current bull market for gold as similar to the one seen from 2001 through 2008. During that period prices skyrocketed from less than $300 an ounce in 2001 to almost $1,000 in March 2008.

In other words, the current bull market for gold may be far from over if you believe it will follow the pattern set between 2001 and 2008.

Don’t Forget: Gold Investing Is Risky

However, as with anything related to commodities investing, investors shouldn't expect a smooth ride with their precious metals holdings. That’s true even when investing in exchange-traded funds that hold bars of solid bullion such as the SPDR Gold (GLD) ETF. 

Prices can move erratically in the short term, meaning there could be lots of volatility. Many individual investors find the emotions caused by the volatility of investments to be hard to handle. So beware of taking on too large a position in gold if you do decide to invest.

 

Simon Constable | Author | Broadcaster | Journalist | Commentator | Speaker. Author of The Wall Street Journal's 'In Translation' column. Fellow at the Johns Hopkins Institute for Applied Economics, Global Health and the Study of Business Enterprise. Former staffer for General Motors Treasurer's Office. MBA from Darden Graduate School of Business at The University of Virginia. MA New York University. MA (Hons) University of St. Andrews, Scotland. Co-author of the award-winning book The WSJ Guide to the 50 Economic Indicators that Really Matter. Have written for Middle East Eye, TheStreet.com, The South China Morning Post, Barron's, Dow Jones Newswires, MarketWatch.

 

 

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