RE:RE:Got Gold ?Gold price at $10k, silver at $500 due to 'a decade of shortage', says Goehring & Rozencwajg | Kitco News My Comment: Inflation is here now. Grocery prices are surreal and some items are not available. The Fed can only dampen demand with tapering and interest rates. They cannot do anything about supply and that's where the problem is. At some point gold has to reflect the increasing inflation. And the Fed cannot raise rates much due to the highly leveraged economy. It's all about the debt. Global debt is now 3.5 x GDP.
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How big of a bull market will it be? Goehring is expecting gold to reach $10,000 an ounce by the end of the decade. And for silver to eventually catch up and trade around $500 an ounce.
"By 2028, gold could be over $10,000. If gold is over $10,000 and we go back to the 20:1 gold-silver ratio. That's $500 silver," he said. "It will be the decade of shortages, and everyone's going to get poorer except for the people that own physical gold and silver."
Silver is another quintessential inflationary metal to buy and hold during the next decade. "I'm convinced that in this bull market, there's going to be another corner attempted at the silver market," Goehring said.
Inflation will get a lot worse during this decade of shortages. And the underinvestment in the resource sector will play a big role.
"When we look back on this decade and ask what happened. It's going to be looked upon as the decade shortage. It's going to be a shortage of everything. Over the last ten years, we've radically underinvested in our resource spaces relative to demand. Look at what's happening with Exxon and Chevron and the ESG concerns. They are not talking about replacing their resource base," Goehring stated.
This underinvestment in the resource sector will manifest itself and that is going to be highly inflationary, the Goehring & Rozencwajg managing partner said. "This year, inflation accelerated from under 3% to over 6%. At some point in 2022, we could approach 9%," he noted.
And the one key metric to watch is the bond market, which has so far largely dismissed the rising price pressures.
"We have inflation now, but we don't have inflation psychology. And that's what the bond market is saying too. However, what happens if the bond market changes its mind? We could see massive panic selling. And that's going to be a big problem for equities. In 2022, the bond market could finally incorporate inflationary expectations," Goehring described.
During the last month of 2021, gold is still in its corrective phase after hitting new record highs last year, but the long-term investors have been using this opportunity to buy.
"Gold hasn't been the place to be for performance reasons this year. And I think that performance discrepancy will continue for another six months. But for people that are looking to buy gold for the long term, they are buying now. Gold stocks too. They are the cheapest they've ever been."