Thorsten Polleit, an acclaimed economist and free-market libertarian, sees a bright future for gold and silver. He predicts sharp price hikes for each metal in 2024 and beyond. After a recent gold rally, he’s pumped. In April, prices shot up to a historic high of $3,500 an ounce. Since then, gold has rallied close to pre-invasion levels and is presently trading at $3,300 an ounce. It has had an actual correction, down almost 6 percent from its top. This strength in gold prices further provides positive confirmation to many that this rally is just getting started.
Polleit emphasizes that gold is currently trading at or near record highs across multiple fiat currencies, including the Japanese yen, British pound, euro, and Canadian dollar. This wide-spread strength is a sign of robust demand for gold as a safe haven asset in the face of increasing global uncertainties.
Global debt is blowing up all over the world, and this, too, is quite inflationary. It’s not just in the U.S. Government debt is breaking new records in Canada, it’s skyrocketing in the UK, and it’s exploding in Europe. In this international world, Polleit continuously emphasized the interconnectedness of global financial systems. He went on to explain gold’s critical function as a hedge against currency devaluation.
Meanwhile, Polleit sees significant potential and momentum in gold prices. This faith continues despite a quarter of aptly-timed consolidation in the last few months. He expects if the stars align with market dynamics there will be more appreciation before the end of the year.
“If that [rate cuts] doesn’t work, if you don’t get the long-term interest rate down, I think it’s very plausible to assume that central banks will start purchasing once again. Once yields come down, you will see a further appreciation of the gold price. There is so much potential and momentum in gold that I expect we will see higher prices before the end of the year.” – Thorsten Polleit
The biggest correction in gold during the bull market from 2001 to 2011 was about 10.1 percent on average. What’s more, this go-round, the correction has been of greater magnitude in time than price. As economist Jeff Clark noted last week, the current correction hasn’t even touched six percent. That’s atypical for such long extensions into market cycles such as these.
“There are always ebbs and flows. There are always corrections – any asset, not just gold. What’s interesting is that the correction in gold since the high, we haven’t even had a 6 percent correction, and that’s not normal. The normal correction…the average correction was 10.1 percent. … So, this correction in gold has been more in time than it has been in price.” – Jeff Clark
Central banks are grappling with a very tricky economic situation. National debt in the United States recently passed $37 trillion, and most analysts are predicting hawkish monetary policy from these banks. Jim Grant commented on these developments, saying:
“I speculate that we are embarked on a long cycle of rising rates. And I say that first of all, for reasons of pattern recognition… But I observe that in 2020 and ‘21, some unimaginably large number of debt securities were priced to yield less than nothing.” – Jim Grant
The persistent low yields on bonds are driving investors towards assets like gold and silver, prompting a “desperate attempt to secure safe haven assets.” As inflation concerns accelerate around the world, this pivot mirrors increasing distrust about the long-term monetary value of fiat currencies.
Polleit points to the possibility of central banks engaging in “financial repression and potentially yield curve controls” if rate cuts do not yield desired results. These moves would only increase demand for precious metals as hedges against rising prices.
With all these factors converging, most experts are in agreement that gold and silver are not just due, but long overdue for major structural breakouts. The potential for prices to double within the next five to ten years remains a point of optimism among analysts.
“Gold and silver are setting up for important structural breakouts, and that the price could double in the next five to ten years.” – Thorsten Polleit