At least through 2023: That’s how long the Federal Reserve expects near-zero interest rates to last as it seeks to support an economy that’s seen more than 60 million jobless claims since mid-March. Gold has thrived in this low-rate environment, hitting an all-time high of $2,070 an ounce in early August, and I believe this price may be retested and surpassed given the extension of the Fed’s easy money policy.
I’ve shared with you a number of times that my three-year price target for gold remains at $4,000. This week, Bloomberg commodity strategist Mike McGlone went even further, calling for $7,000 gold by 2025 as balance sheets at the world’s four biggest central banks continue to expand as a percentage of GDP.
According to Mike, the same friendly monetary conditions that propelled the price of gold up 7.5 times between 2001 and 2011 are visible today. The difference now is that quantitative easing (QE) as a policy is “accepted on a global scale,” suggesting there’s “little to stop” G4 central banks from slowing their asset-buying programs.
“At the start of 2008, gold was up about 200 percent on a 120-month basis versus only around 40 percent at the onset of 2020,” Mike writes. “From 2001-2011, gold advanced about 7.5 times, which if repeated would bring it to around $7,000 in 2025.”