$3,000 Gold Price Forecast from Merrill Lynch/BOA

There could be a bunch of reasons for that:

• The stock prices don't think the rise is going to hold
• The stocks already moved and discounted the current price
• Their are operational issues that prevent the rise in gold prices from flowing through to stock prices (the case from 2007-2020)
• Gold and gold prices have rarely moved togther in tandem, except for the 1970's.

 

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third bullet maybe

 

Back over $1,900...slowly rising.

Good price action. Sustainable.

 

In Germany, during the early 1920s my grandfather would be paid twice a day and he would need two satchels to carry the money. My father said that a shopper needed a stack of bills just to buy butter.

 

It's not something that can happen again. Back then, financial information and bad policies could continue for weeks or months.

Today, changes are known within minutes.

Even LDCs don't have hyperinflation today, though rates of 20-30% are common at times.

 

Hmmm, let me think about this!

Because we know that hyperinflation occasionally currently exists, it isn't a problem, as it will quickly not exist.

OK!

 

The benefits of debasing the currency are not worth it, no.

Most countries are tied to the international financial markets and you won't be able to borrow in the capital markets or have the IMF/World Bank sign off on stuff if your currency is a clown act.

See any investment going to Zimbabwe lately ?

 

Slow news day, so take this for what it's worth.

But if the Chinese and Indian middle class start buying gold like they can in relation to their rising standard of living....look out. I've seen estimates that the per-capita buying would be 5-10x Central Bank sales/purchases and could drive the price of gold up 10-15% annually for a decade.

https://www.zerohedge.com/news/2023-01-16/real-rates-tell-us-china-wants-gold

 

"...China and India accounted for 60.53% of the world’s gold jewelry market in 2021 by tonnes of gold sold. In particular, with 675 tonnes sold, China led with a market share of 31.77%, while Indian consumers purchased 611 tonnes, representing 28.76%. Southeast Asia comprising Indonesia, Thailand, Vietnam, Singapore, and Malaysia, cumulatively purchased 64 tonnes.

Other leading jewelry gold consumers include the United States (149 tonnes), Europe (68 tonnes), Turkey, and the UAE combined (68 tonnes). The rest of the world has the third largest share of 489 tonnes or 23.02%."

GOLD RESERVES (metric tons):

1. United States — 8,133
2. Germany — 3,359
3. Italy — 2,452
4. France — 2,436
5. Russia — 2,299
6. China — 1,948
7. Switzerland — 1,040
8. Japan — 846
9. India — 754
10. Netherlands — 612

 

Boy that puts a damper on my few ounces compared to their Metric tons. I didn't realize it was that much.

 

It's the NEW DEMAND for the growing middle class in the 3rd World and China/India that can really absorb gold supplies and even central bank sales.

Now...if CB's aren't net-sellers (they haven't been lately)....and if new gold out of the ground dwindles because of rising operating costs, regulations, environmental, etc.....then you have a perfect storm where the price of gold can SKYROCKET in a few months or a few years.

Here's an example: when the price of oil fell in 2014, CAPX fell by about 60%. Then prices went NEGATIVE during Covid. It's why oil rebounded to over $100 in 18 months. A permanent reduction in supply (from reduced CAPX) and then a rise in demand...can lead to a big increase in price.

I am very confident it's coming for gold....I just don't know WHEN.

But I guarantee you I or someone else will be quoting this post years down the road.

 

Central Banks haven't bought this much gold since 1967 when we were still on the Gold Standard:

https://qz.com/central-banks-havent-bought-this-much-gold-since-1967-1849726636

 

When you look at the burgeoning middle-class demand for gold in China, with India poised for a decade of 5-7% GDP growth and an exploding middle class....with Asian demand and even African and South/Central American demand risiing.....I can EASILY make a case for multiple levers of rising demand with limited supply growth (if any)...reduced Central Bank sales....and the same underlying supply/demand imbalances that caused oil to skyrocket in the 1970's or even bounce back bigtime from negative prices in April 2020 in only 2 years to over $125/bbl.

With tens of millions of middle-class buyers of gold, I can easily make a case for 2,500 - 10,000 new tons of new demand coming in each year. Even if the amount initially and periodically purchased is off...even if many don't want gold but financial assets or crypto...these are countries and regions with cultural attachments to gold that will not be easily as broken with many as it would with a 25-year old with a smarpthone and financial App.

I look back on $325 gold 20-25 years ago and wonder why I didn't buy more. And I wasn't even aware of Saints and Double Eagles (or even Eagles) at the time. Common Saints at $450.....MS-66's for under $2,000 and even MS-67's probably cost under $5,000.

I wonder if we'll say the same thing in a few years or maybe a decade about gold at $2,000 an ounce ?

 

Yep, it's going really well but I'm gonna hold off on buying cause when it's this high I can't guarantee I'm gonna make any profit and I'm already over extended!

 

Well...you have to hope you guess right. Because "high" is relative and while you can be down $50 an ounce a few days after you buy.....both prices can look like a blip in 2027 if my scenarios above come to fruition.

The next $300 can be UP or DOWN, I agree. But the next $500 is almost certainly UP and the next $1,000 is ABSOLUTELY up !

 

The kind of story we look back on and say "I should have seen the price move coming":

https://finbold.com/china-and-india-control-60-of-all-gold-jewelry-market-globally/

 

The lead "UP & DOWN WALL STREET" column in BARRON'S this week by Randy Forsyth is about gold.

Highlights:

• Only time since gold was unfixed in price that it outperformed the stock market in a quarter (this was for the Q4 2022 period).
• Only 6% below ATH.
• Gold has risen in 10 of the past 12 weeks and 5 straight.
• Investment firm Strategas getting more inquiries about gold in recent months than in years.
• Crypto off to good start in 2023 along with gold so gold's ascent is NOT on the backs of crypto rubble.
• Lots of geopolitical risks inside and outside the U.S. in 2023 (debt ceiling, Ukraine) that can move gold up.
• Saudi Arabia willing to sell oil in currencies other than the dollar.

 

Nice report from BMO (Bank of Montreal). Shows major demand supply and demand sources.

Keep an eye on India. Price-sensitive now, but rapidly rising GDP and population growth through 2030 could make this a big source of demand going forward.

Note that central bank selling is now BUYING.

Finally, I wonder if the mining forecasts will come through with increased energy costs, ESG nonsense, and regulatory burdens.

BOTTOM LINE: At any point in the next few years, the price of gold bullion can move 10-15% in a few days. You could also see a 50-100% move in a few months.

Our coins that are tied directly or priced off of the spot gold price can go up HUGE for non-numismatic reasons. That MS-65 Saint-Gaudens that you didn't want to pay $2,400 for can go to $4,000 (again !) if gold is north of $3,000.

 

Gold up $70 today, or 3%....BitCoin up, too. Ironically, stocks (another risk asset) sold off.

Strange times....but that's to be expected with financials blowing up all over.

 

Holy Shamolee…. I don’t study these chart’s frequently but I did just look today. Wonder if 2k gold is in our immediate future?