There may still be plenty of upside for gold.
Even after running to $2,000 earlier this year, Goldman Sachs says gold could run to $2,500 by the end of the year—especially with fears of a potential recession.
According to Jeff Currie, Goldman Sachs global head of commodities research, as quoted by Bloomberg, “It’s a perfect storm for gold right now.”
“There’s three legs to this story. One, you have strong investor demand for gold over concerns about inflation, recessions, and downturn in places like Europe. The second leg is central bank buying … and with the situation in Russia, they’re likely to accumulate dollars in reserves they can’t do anything with. What can they do with it? Buy gold. Then you have central banks in places like China and Turkey diversifying for de-dollarization reasons. Then you have diversification reasons in places like Brazil and India.”
Weak consumer confidence could send gold higher, too.
“We don’t find inflation, real‐rates, money supply or any of the theoretical inputs to be of much use for gold’s forward returns. We do, however, find consumer confidence to be a meaningful input, with high levels of confidence preceding weak forward returns and a dearth of confidence setting up bullish returns,” said Jeff deGraaf, founder of Renaissance Macro Research, as quoted by MarketWatch.com.
About a week ago, a survey by the University of Michigan found that consumer sentiment fell to a 10-year low thanks to inflation concerns, and Russia’s invasion of Ukraine.
That being the case, investors may be able to find further upside in stocks, such as Barrick Gold (GOLD), Newmont Corporation (NEM), and B2Gold Corp. (BTG). Another great gold trade is the VanEck Vectors Gold Miners ETF (GDX) – which holds positions in Newmont Corp., Barrick Gold, Franco-Nevada, Agnico Eagle Mines, Gold Fields, and Wheaton Precious Metals to name a few.