If you’ve followed Warren Buffett for any length of time, you know about his reputation for being staunchly anti-gold. He regularly has taken pot shots at the metalover the years, once saying, “It doesn’t do anything but sit there and look at you.” However, the Oracle of Omaha made news when it recently was learned that his Berkshire Hathaway holding company had purchased an interest in gold through popular mining company Barrick Gold (symbol: GOLD).
To be clear, purchasing a gold mining company is not the same thing as purchasing the physical metal. But it still represents a foot in the gold door that those familiar with Buffett’s aversion to the metal never thought they’d see. For many observers, it’s a loud and clear signal that gold is, indeed, the place to be in the current environment.
Last year – long before the onset of COVID-19 and the current precious metals surge – you may remember that legendary Franklin Templeton fund manager Mark Mobius suggested gold was an ideal purchase “at any level.” It was a startling declaration for a professional money manager to make. When is the price at which one buys an asset ever immaterial?
What Mobius was trying to convey at that time is just how marvelous the anticipated future for gold was. It’s worth noting that, more recently, Mobius modified his earlier bold statement just a bit. In the wake of gold’s substantial March-through-July jump, he now advises those still considering a purchase to wait for a correction. However, that opinion does not represent a change in Mobius’ secular outlook for gold. He still sees it as one of the “safest” assets to own right now.
The views – and buying choices – of those such as Buffett and Mobius are part of a laundry list of indicators suggesting gold still has a robust future. Some retirement savers are a little frustrated, however, at what they see as a lack of specificity when it comes to gold projections. For them, it’s not enough to know more generally that the economic table is set for another gold rush. They want to know what price gold ultimately will hit during this current metals bull market.
It’s understandable, but we all know that no one can predict the future. Still, there are highly reputable experts who’ve gone as far as to establish price targets for gold in the current market. Let’s take a look at what five of them have in mind as far as a peak price for gold in this cycle.
Current Gold Price Targets from Selected Analysts and Fund Managers
- Michael Widmer, Head of Metals Research, Bank of AmericaGold Price Target: $3,000
“The current macro-economic backdrop of loose monetary and loose fiscal policy reinforces that dynamic, so we believe the recent rallies can be justified. We expect gold to hit $3,000/oz. in the coming 18 months.”
- Jan Van Eck, CEO of Van Eck AssociatesGold Price Target: $3,400
“If one believes, as we do, that the current central bank stimulus to fight 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. This target comes from taking the post-financial crisis move of 150% on top of the $1,350 gold price base in the summer of 2019.”
- Frank Holmes, CEO of U.S. Global Investors Gold Price Target: $4,000
“If we take a look at the last money printing, we’re going to go from $1,500 to $4,000. I think over the next three years there’s a high probability of gold going to $4,000.”
- Diego Parrilla Portfolio Manager of QuadrigaIgneo Hedge Fund Gold Price Target: $3,000 to $5,000
“What you’re going to see in the next decade is this desperate effort, which is already very obvious, where banks and government just print money and borrow, and bail everyone out, whatever it takes, just to prevent the entire system from collapsing.”
- Dan Oliver, founder of Myrmikan Capital Gold Price Target: $10,000
“The Fed, as you know, has been on a massive purchasing spree because of the virus situation, and so therefore the equilibrium price of gold is going up commensurately, and so the numbers now to balance that balance sheet are enormously high. My [forecast for gold prices] has changed. I’m at $10,000 now.”
Fed’s Confirmed Loose-Money Agenda Is the Key Driver of Higher Gold Prices
The price targets are disparate, but they have one important feature in common: Each is well above gold’s current price level. For example, although $3,000per ounce sits at the lower end of the projected price range indicated here, it still represents a 52% increase above current gold price levels. If gold reaches Frank Holmes’ $4,000-per-ounce projection, it would mean gold moves 103% higher from here. And as for the $10,000-per-ounce forecast by Myrmikan Capital’s Dan Oliver, hitting that price would mean gold rising 408% higher.
You’ll notice that each of the analysts and fund managers cited the expected continuation of highly accommodative monetary policy as the primary basis for their projections. The Federal Reserve itself has confirmed it plans to maintain that policy posture for the foreseeable future. Recently, Fed Governor LaelBrainard said the central bank’s agenda in the post-pandemic era will include “maximum employment” and an average inflation rate of 2%. To get there will require a lot more of what we’ve already seen this year from the Fed when it comes to loose-money policy strategies and tactics.
So how accurate will any of these price targets ultimately prove to be? Only time will tell. A move 50% higher sounds great. A rise of more than 400% sounds positively splendid. It is, of course, unknown if either corresponding target price will be reached – or even if gold will continue moving higher at all. My suggestion is to focus not on any specific price projection but instead on the very optimistic implications for gold conveyed by Fed sentiment. Assuming the Federal Reserve sticks to their declared agenda, the environment for gold should remain strong.
What are you waiting for? Get into gold investing with your IRA today!