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Warren Buffett is famously anti-gold. In spite of that, he recently made news by actually purchasing gold, after a fashion. He did not buy the physical yellow metal itself. He bought one of the more popular mining companies. Given Buffett’s profound equities bias, it makes sense that he would choose to gain exposure to gold in this way. But don’t miss the point: Even Warren Buffett has decided it’s time to gain an interest in gold.
Mr. Buffett’s extraordinary purchase of gold mining assets is one of many recent notable moves made by high-profile investors. Last year, legendary asset manager Mark Mobius suggested gold would be such a valuable asset that savers should buy it at any price. For someone who’s made his mark living by the mantra “buy low, sell high,” it seemed an astounding declaration. After all, who would ever buy any asset without regard to price? His words said something about the respect experts are showing to the yellow metal for its ability to protect portfolios.
More recently, Mobius revised that earlier proclamation just a bit. He’s now saying those still on the sidelines should wait for a correction in the metal before moving forward. Mobius apparently is deferring to his natural tendencies as a money manager to favor equities. But his latest opinion is rooted in short-term price action rather than underlying fundamentals. When it comes to fundamentals, Mobius is still a gold devotee, calling it one of the “safest” places to be right now.
So, some of the world’s most storied money managers – including the previously completely gold-averse Warren Buffett – think gold is a great place to be. But what should retirement savers expect from the yellow metal by the time the current precious metals bull market has run its course? More specifically, what price level should they be looking for gold to achieve as a “high” during this market? Perhaps savvy fund manager and gold analyst price projections could be useful. Let’s see what they have to say.
Gold Analyst Price Target Sampling for Current Precious Metals Bull Market
- Michael Widmer, Head of Metals Research, Bank of America Gold 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 Associates Gold 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 Quadriga Igneo 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.”
- Devlyn Steele, Senior Economic Analyst at Augusta Precious Metals Gold Price Target: $5,000
“The Fed balance sheet is getting bigger and bigger while they’re promising to keep interest rates near zero and print more and more money. Between the pandemic surging, social unrest and the Fed printing more money than any other central bank, the result is that the rest of the world is losing faith in the dollar. My proprietary value model has gold on target to hit $5,000.”
- 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.”
Gold Analyst Price Target Optimism Rooted in Fed’s Ultra-Loose-Money Agenda
Each of these price targets represents a substantial increase over current levels – and one is significantly higher. For example, the 3,000-dollar-per-ounce gold forecast by Bank of America translates to a 52% increase above where gold is at today. Frank Holmes’ 4,000-dollar target is 103% higher than gold’s current price. Gold reaching the 5,000-dollar target projected by Diego Parrilla and Devlyn Steele would mean it climbs 153% from here. And if gold manages to hit 10,000 dollars as forecast by Myrmikan Capital’s Dan Oliver, it will travel 408% higher.
These projections really are not a big surprise when we consider that drastically accommodative monetary policy likely will be the rule for the foreseeable future. This policy is the primary justification for the projections of significantly higher gold prices. And the most recent declarations from the Fed itself as to the direction of monetary policy strongly reiterate these expectations.
Last week, I discussed the Federal Reserve’s anticipated gold-favorable agenda as detailed recently by Fed Governor Lael Brainard. Brainard made clear that post-pandemic goals for the central bank include “maximum employment” and an average 2% inflation rate. To get there will require a lot more of the same hyper-accommodative monetary policy we’ve seen since the pandemic hit. As the aforementioned analysts and fund managers recognize, this should be rocket fuel for gold.
Ultimately, only time will tell if gold climbs another 50% or 400% – or stops climbing altogether. But it seems difficult to argue with the rationale of professional observers and gold analyst price targets at much greater heights. This is particularly true considering the Federal Reserve is using the same rationale in the form of its own stated policy agenda. As you make your plans, I encourage you not to place too much weight on any one of these specific price projections. Instead, pay more attention to the broader and very robust implications for gold that both analysts and Fed sentiment clearly are conveying.