Originally published April 25, 2024
The prospect of interest rate cuts and subsequently, a declining dollar, may be helping fuel gold's rally. However, it's not the only factor propelling gold to new highs this year.
In a Kitco News report, commodity investor Dennis Gartman could see gold pushing past the $3,000 price level in the next two years. According to Gartman, the current macroeconomic environment is akin to the 1970s, when gold's rally was fueled by the Federal Reserve's rate hikes to tamp down inflation.
“Gold goes a lot farther from here. I look for gold to hit $3,000 an ounce in the next couple of years,” he said.
“I think the environment we are in is, in some ways, a lot worse than the 1970s. There is so much more confusion and uncertainty in today’s conflicts that will continue to drive safe-haven demand to gold,” Gartman added.
Another catalyst for higher prices is growing geopolitical tensions, which could also spur a flight to the precious metal. Gartman noted that the government weaponizing the U.S. dollar against certain countries is not beyond the realm of possibilities.
“The U.S. government is looking at outright confiscating Russian funds, and if they do it once, they will do it again,” he said. “Some governments are seeing this threat and continue to move away from the U.S. dollar. Right now, the only alternative is gold. I expect we will continue to see central banks around the world continue buying gold. This has only just started.”
The S&P GSCI Gold index is up almost 17% for the year. Given the aforementioned factors, it's an ideal time to get ahead of another potential rally using gold funds.
^SG5C data by YCharts
2 Ways to Gain Gold Exposure
Investment funds from Sprott offer an ideal way to get exposure to upside in the precious metal. One way is the Sprott Physical Gold Trust (PHYS), which offers gold exposure without the inconvenience of having to store physical gold. However, investors retain the option of converting their shares of the fund into physical bullion.
Additionally, an alternate play on the metal’s prices via ancillary gold services like mining offers opportunities in the Sprott Gold Miners ETF (SGDM). The ETF seeks investment results that correspond generally to the performance of the Solactive Gold Miners Custom Factors Index. This index tracks the performance of large gold companies found on Canadian and major U.S. exchanges.
For more news, information, and analysis, visit the Gold/Silver/Critical Materials Channel.
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