Gold’s steady prices shouldn’t be taken as a stagnation, rather a hibernation says one investment expert. The self-proclaimed ‘Bond King Jeffrey Gundlach says gold prices are in a period of ‘hibernation’ but expects to see significant new highs on the horizon – making now the perfect time to buy to get ahead of the curve.
Gundlach says that the US dollar is facing an inevitable decline – something which further supports spiking gold prices. The investment specialist said, “My number one conviction looking forward a number of years — I’m not talking about the next few months at all, I’m talking about several years — is that the dollar is going to go down. The dollar going down is another reason why we touched on gold. I think ultimately gold is going to go a lot higher.”
He also questions whether economic growth is really a reality, given the sheer volume of stimulus measures pumped in to the COVID-battered economy over the course of the last 18 months.
“We have debt-to-GDP that is fueling the majority of our so-called economic growth. So, is it really economic growth when you borrow money or print money, send checks to people who turn around and buy goods on Amazon in addition to maybe paying down debt and speculating and these goods come in from China? A lot of that consumption is going to China … That’s one of the reasons why China has such a strong economy. So, what we’re seeing in the United States is starting to fall behind in economic growth. That’s not a new thing. That’s been going on for a generation, the U.S. falling behind.”
While dollar strength has pinned back gold prices at some points this year, Gundlach expects that the greenback’s strength will wane, adding “The dollar has been in a series of declining highs for decades — it goes back to the ’80s. For that reason, I think when we get to the next break to the lower level, the dollar will go past the most recent low of around 80 and even take out the low of 70. So, I think there’s easily 25% downside in the U.S. dollar.”