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Gold has been rising over the year, after stalling just below the $ 1,300 mark for weeks. All the factors for the metal to reach record levels could finally be in place.
"Gold is doing well in times of dollar weakness, inflation and economic uncertainty," says Peter Schiff, chief strategist for Euro Pacific Capital, a division of Alliance Global Partners. . "We are about to get all three."
Gold prices have been held back by expectations that the Fed's monetary tightening cycle will continue for years, says Schiff. "Everyone now recognizes that the Fed has finally tightened and that the bias is going in the other direction, but not many people understand how fast and how fast [the Fed] will have to relax its monetary policy in the months to come, "he adds.
Read about Barron's: How could gold organize a rally of 20% this year
According to Schiff, the economy is approaching a "severe recession" that will prompt the central bank to launch a new round of quantitative easing, or asset purchases, aimed at lowering interest rates. He predicts that the next cycle of quantitative easing will be much larger than the previous ones. "Given that, gold should skyrocket," he says.
Gold futures
GCQ19, + 0.17%
Friday at $ 1,346.10 an ounce, which allowed their earnings to rise to an eighth consecutive session, up about 2.7% for the week.
According to Brien Lundin, Editor-in-Chief of Gold Newsletter, prices will exceed $ 1,375. It will be difficult, he said, to overcome this obstacle, but could release $ 1,500 by the end of the year, a level unprecedented since April 2013.
Schiff's price forecast is even more optimistic. Gold has the potential to make an "extraordinary move," he says. Gold has maintained a narrow range over the past three or four years and has maintained a floor of around $ 1,200 "despite the near-lack of conviction that investors currently need a" cash flow ". hedge against inflation and a dollar down. "
"When the sentiment finally changes, gold could move from its current well-established base to much higher levels than previous highs established almost ten years ago," Schiff said. Prices exceeded $ 1,900 per ounce in September 2011.
Choosing the best way to invest in the precious metal has become more important than in the past.
People seeking to establish long-term physical gold holdings should use a combination of coins, bullion and gold certificates held off-site, says Schiff. "Access to the real metal will always be the ultimate safety net," he adds, while gold certificates, which indicate the ownership of gold, offer a great deal of bullion security "without storage costs and risk for safety."
Gold Exchange Traded Funds, including SPDR Gold Shares
GLD, + 0.56%
offer "extreme convenience and low cost, but they are passive investment vehicles," he says
Investors could also consider buying shares of gold miners. Most investors "still believe that gold will fall in the coming years, and the price of mining stocks reflects this gloomy vision," says Schiff. VanEck Vectors Gold Miners
GDX, + 0.09%
offers exposure to mining stocks.
There are also gold trading platforms. Goldex does not own gold, but it facilitates transactions at the best prices for metal. The metal sold through Goldex is 100% guaranteed by fully allocated physical gold, said Sylvia Carrasco, its general manager. "Every ounce of gold belongs to the customer, from start to finish."
Schiff advises and invests in Goldmoney
XAU, -1.35%
which provides an online investment platform for buying and selling precious metals. He favors debit cards with gold backing. Goldmoney issues the Goldmoney prepaid card.
Gold Newsletter's Lundin notes that gold has "4,000 years of financial protection experience in the countless cases of debt / currency devaluation". This may be another reason to get excited about the recent recovery.
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