Now could be the best opportunity for a long while to buy on the dip according to an industry insider who says that the current pullback will be “the last great buying opportunity”.
To recap, we have seen gold ascend to record levels very rapidly over the course of the last month. At one point, the precious metal sailed past the previous 2011 high of £1,450 ($1,920) to tip the charts at £1,549 ($2,050). This was fuelled by a weaker US dollar and the ever-present economic shadow of recession and job losses as a result of the global pandemic. As we reported in our mid-week bulletin on Wednesday, the normal and entirely predicted dip happened earlier this week, with gold down to £1,451.46 ($1,918.10), which was a £91.75 ($121.60) decline.
Investment firm Goehring & Rozencwajg Associates says that it expects gold to gain significantly in the near future following the natural pull back. The managing partner Leigh Goehring says the only way is up. Goehring suggests that by the latter half of the present decade, the historic trends and patterns suggest that anything from £7,584 ($10,000) to £15,167 ($20,000) is entirely realistic.
He said, “Prices could continue to see slight pullbacks because of quickly receding fears of the COVID-19 pandemic. It is not uncommon for bull market moves like this. This bull market started at $1,050 (£792) and got as high as $2,050 (£1,549). To give back 50% of it, you would have to pull all the way back to anywhere between $1,500 (£1,133) to $1,700 (£1,285) in gold.
“From then on, the gold bull market goes crazy. I’m a firm believer that the next leg is going to be driven not by COVID-19 fears but by inflationary problems. Based on our research, gold often trades at a certain relative size to the Federal Reserve’s balance sheet. Using this type of analysis — the amount of gold outstanding, specifically how much gold the U.S. government holds, relative to the size of Federal Reserve’s balance sheet, you can get anywhere between $10,000 – $20,000.
“Our target is between $10,000 (£7,584) – $15,000 (£11,373). That will happen at the mid part of this coming decade — 2023 – 25.”
The investment firm also expects that inflation will become a real issue when coronavirus is finally in the rear view mirror and the Federal Reserve can begin to balance its books following huge economic stimulus. This is also very positive for gold in the long term. Goehring said, “If you think about it, almost every financial asset is somebody else’s liability, including all the bonds that are outstanding. And gold will be perceived as a financial asset that is no one else’s liability. And that itself will be another huge driver of this global market.”
Buy now on the dip to accumulate gold before prices go much, much higher.