Goldman Sachs Eyes Record Gold Price in Next 12 Months
Even the mainstream is getting bullish on gold.
Goldman Sachs now forecasts record gold prices within the next 12 months.
Goldman analysts say gold will likely reach $2,000 per ounce within the next year thanks to ultra-low interest rates and concerns over currency debasement.
The investment bank raised its 12-month forecast from $1,800 per ounce to $2,000 in a note released last Friday. It also upped its three-month view to $1,800 and its 6-month forecast to $1,900.
Goldman cited a number of factors including “continued debasement concerns” and a weaker dollar. It also expects a pickup in emerging market demand for gold as economies reopen. Analysts said this strength in “development market investment demand” should “persist even as economies recover, supported by fears of debasement and the higher level of economic uncertainty of the crisis.”
Goldman also raised its silver forecast from $15 per ounce to $22 per ounce.
If anything, Goldman is likely underestimating gold’s trajectory. Take the investment bank’s concern about low interest rates. In a press conference after the June FOMC meeting, Federal Reserve Chairman Jerome Powell said, “We’re not even thinking about thinking about raising rates.”
Peter said the Fed’s official statements and Powell’s comments after the meeting show him that what the Fed is doing now “really amounts to nothing but a monetary Hail Mary.”
The Fed is desperate. They know that everything is going to fall apart. So, they just got interest rates at zero and they don’t care what happens. It’s like they got their pedal to the metal, and they’re going full-speed ahead, and they just closed their eyes. They don’t even care what’s on the road because it doesn’t matter. Even if they go over a cliff and crash and burn, it doesn’t matter because they’re going to die anyway. I mean, that’s basically what they’re saying.”
This is certainly bullish for gold.
Speaking to Goldman’s concern about dollar debasement, there have also been a number of people in the mainstream starting to raise concerns about a monetary crisis. Yale economist Stephen Roach’s warned that “the era of the US dollar’s ‘exorbitant privilege’ as the world’s primary reserve currency is coming to an end.” Meanwhile, Guggenheim Investments Chief Investment Officer Scott Minerd said that while “there are no signs the world is questioning the value of the US dollar” right now, it’s clear that the greenback is “slowly losing market share as the world’s reserve currency.”
And he said buying gold is the key to offsetting the dollar’s decline.
With the Fed going all-in on financing the government deficit, the US dollar could be at risk to negative speculation of its status as the dominant global reserve currency. Investing in gold may help offset this trend.”
Even before the coronavirus pandemic, Peter was warning about the dollar’s demise. During an interview on RT last September, he warned that America’s “fiscal profligacy” was going to sink the dollar.
What has enabled this over the years has been the world’s willingness to hold US dollars as the primary reserve currency and to continue to loan money to Americans and to the US government so we can continue to live beyond our means. We can have enormous government programs that we don’t pay for and we can consume all kinds of goods that we don’t manufacture, and we can live in an economy based on consumption and debt without having to save or produce. The world has done that for us. And I think this is what’s going to come to an end. I think we’re going to see a collapse in the value of the dollar, and when the dollar does collapse, America’s power is going to dissipate. And Americans are going to have to deal with the reality that we’ve hollowed out our infrastructure; we’ve been living beyond our means. And there’s going to be a day of reckoning for these years of excesses.”
The unprecedented Federal Reserve money printing and the massive borrowing and spending binge by the US government in response to COVID-19 have only accelerated the process. In March, Peter said during his podcast, “I think we’re very, very close to a major collapse of the dollar, a major breakout in the price of gold, to a breakdown in the bond market.”
Given the actions of the central bank, the fact that there is no end in sight and the Fed doesn’t even have an exit strategy, Goldman’s bullishness on gold is certainly warranted – and then some.