Good news is finally rising to the top amid the COVID-19 pandemic and its associated months of bleak public health and economic outlooks. States are making plans to safely reopen, parts of the market are making comebacks, and Bank of America’s announcement this week also added to the list – sharing their analysts’ forecast that gold will reach a trading price of $3,000.
Gold began its climb in September 2018, trading at $1,465.70. In just over 18 months it has risen about 18.5%, trading today at $1,714. This is an impressive run by many standards, but according to analysts at Bank of America, it’s nothing compared to the 73% it will rise in the next 18 months.
Bank of America’s Strategist Michael Widmer attributes this forecast to an extended period of low rates worldwide as central banks try to boost GDP growth and inflation, as well as countries’ balance sheets increasing while their deficits simultaneously balloon.
“Another important point to remember is that, just as central banks are socializing risk in financial markets, governments are increasing their spending like never before during peacetime,” wrote Widmer. “Investment demand has correlated strongly with gold prices in recent years, and we expect precisely this group of buyers to drive gold prices higher.”
The climb isn’t expected to be a straight line up, since gold will have to contend with a strong U.S. dollar and reduced demand from places like India and China, but these challenges have been factored into Widmer’s 18-month $3,000 forecast.
I believe we’ve already left gold’s “base camp” on this climb. While I expect, as Widmer does, that there will be other “camps” on the way up where we see gold pause or even head south temporarily, I am convinced that now is the best time to position your clients or yourself in physical gold and silver as it ascends this unprecedented peak.
Although we at National Gold Consultants typically characterize physical gold as wealth insurance and only recommend allocating 5% to 10% of a client’s portfolio in the yellow metal, this is a rare opportunity for gold to perform as a strong investment. Contact us today to position your client in physical gold or for our help in evaluating the strength of your client’s current position.