Fund Manager Who Predicted Gold’s All-Time High Sees Gold Doubling in 3-5 Years

Fund Manager Who Predicted Gold's All-Time High Sees Gold Doubling in 3-5 Years
Photo by Zlaťáky.cz

From Birch Gold Group

This week, Your News to Know rounds up the latest top stories involving gold and the overall economy. Stories include: Fund manager says gold could double in price, now is the right time to buy gold, and silver prices are getting ready for a big jump.

Now is likelier than ever for gold to double in price, says fund manager

Different funds have different approaches, and that of the Quadriga Igneo is a defensive one. Its gold-heavy allocation definitely paid off over the last few years. More notably, the fund’s manager Diego Parrilla accurately predicted that gold would move past $2,000 last summer. Not long after, gold went on to post a new all-time high of $2,070.

Parrilla is no less bullish on gold now than he was last year, and expects the metal to once again surprise investors. As some ponder gold’s day-to-day price fluctuations, Parrilla has focused on the larger picture. That’s a smart way to keep an eye on the forest without getting distracted by the trees. Parilla sees big changes in the next 3 to 5 years, a timeframe in which he believes gold will climb to $3,000 and possibly as high as $5,000.

Parrilla said that market watchers are grossly underappreciating the long-lasting effect that the monetary stimulus will have on the economy because it appears to have not done any severe damage in the near-term, even though there have already been spikes in inflation across the board. Specifically, Parilla said:

Central bank money printing isn’t really solving problems, it’s delaying the problem. Gold will benefit purely from being a physical asset that you cannot print.

Certainly, gold benefits from the rush to safety in tough economic times. Gold is most popular during stock market crashes, and incredibly beneficial during periods of high inflation.

Parrilla noted the upcoming decade will see inflation that central banks can’t rein in, despite what officials are saying. He listed historically low interest rates as an example of a risk that investors might be underestimating, and one that tends to support gold’s price.

Here’s why: Many investors consider both gold and short-term U.S. Treasury notes as highly-liquid, safe-haven assets. Gold, however, doesn’t offer a yield. When interest rates are high, short-term notes and bills can offer interest payments as an incentive to investors. When interest rates are low (and especially when they’re well below the current rate of inflation), the opportunity cost of choosing gold as a safe-haven investment disappears.

In near-zero interest rate environments with high inflation as well, gold truly shines.

Why J.P. Morgan Chase thinks now is the right time to move into gold

A recent analysis from the J.P. Morgan Chase wealth management department discussed when and how investors might want to buy gold, and why now might be a good time to get started. (Some investors aren’t particularly concerned with timing, because they know gold is a good investment regardless of when one buys in.)

The data certainly corroborates this. As of July 29, the price of gold has appreciated 579% within two decades, and has since inched slightly upwards.

That’s quite surprising for an asset that has no yield and pays no dividends. Maybe more surprising for what’s thought of as the safest of safe havens. The security that gold offers in the long term looks especially appealing compared to the kind of short-term volatility we see in the stock market, attracting both opportunistic investors and day traders.

Samuel Zief, Head of Global FX Strategy at J.P. Morgan Private Bank, said that gold’s lack of correlation with any other asset is what sets it apart. Opting to invest in physical gold also ensures that holders are free of any counterparty risk. Any kind of turmoil, inflation risks, U.S. dollar concerns and Treasury yield slumps are scenarios that attract people to gold, bolster its appeal and drive prices up.

While portfolio diversification doesn’t require market timing, those looking for a good time to buy gold might get their wish fulfilled. Rising inflation and sinking interest rates are often a signal for investors to move into gold, and it is precisely the kind of environment that has been on full display this year.

CPM Group: $24 silver will likely be a signal for a move above $28

CPM Group’s Jeff Christian spoke to Barron’s about what could turn out to be a buying opportunity for silver investors in the short-term before the metal moves onto $28 and possibly towards the highs seen last August. As Christian noted, silver currently faces selling pressure due to tepid price action in the market, a strong stock quarter and the U.S. dollar holding its ground.

Because of this, many investors who bought silver early last year could exit the market sometime in the next two months. This could bring prices to $24, and in doing so, signal a move up that might bring about fireworks not unlike those of last year.

“If you see $24 an ounce prices, then buy it because the probability is that we’ll see $28 soon. And ultimately, it will move higher over the next several months,” said Christian.

The view that a dip would present a buying opportunity goes in line with CPM Group’s general expectations for the precious metals market. In a recent statement, the firm elaborated on their bullish forecast: “CPM Group believes that precious-metals prices are presently in the foothills of a much larger increase in the prices of these metals over the next several years.”

2021, gold price, safe haven, silver price