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Gold Price Could Raise Five-Digit Price Mark
Central bank stimuli as price drivers
Demand exceeds supply
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The price of gold has increased by more than a third in the last twelve months. There was a sharp rise in prices in relation to the slowdown in financial markets, due to uncertainties about the economic consequences of the crown pandemic. But an expert believes that the precious metal may soon go much higher.
Did the price of gold drop to $ 10,000?
In an interview with “The Street”, Frank Holmes, CEO of US Global Investors, issued an extremely high price target for gold: in his opinion, the price of gold could reach an unprecedented level.
The expert referred in particular to the prevailing market conditions. “We still have negative real interest rates, and that’s a good sign of gold. I think gold can easily cost $ 2,700, like palladium last year. It may also be $ 5,000. I don’t know when the monetary pressure stops. but it could go up to $ 10,000 for the world economy to recover, “Holmes said.
Central banks provide incentives
Central banks, in particular the US Federal Reserve. The US will drive prices, Holmes believes. After all, the Fed had provided $ 5 trillion to expand its balance sheet, what the investment expert called “unprecedented.” In his opinion, the price of gold could react to this stimulus in a similar way to that of the 2008 financial crisis: at that time, the price of the precious metal had soared, which in 2011 reached $ 1,908.79, the all-time high for the gold to date.
To jump to the $ 10,000 price that Holmes believed possible, the precious metal would still have to gain momentum: gold is currently trading around the $ 1,700 mark, so the price would have to rise almost sixfold.
However, Frank Holmes believes that a jump is possible, as he emphasized in the interview: “We are waging a third world war against the pandemic, an unprecedented event, and the response of monetary policy will bring the price of gold to a level without precedents “.
The expert also referred to the disruption of the global supply chain that closure efforts have brought about in many countries. This also affects the gold industry, according to Holmes. “I think there are major interruptions in supply around the world and I believe that the demand for gold will recover much faster than supply,” he emphasizes.
Editorial office finanzen.net
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