This Bank Calls For $3,000 Gold
This Bank Calls For $3,000 Gold
$3,000 gold is possible within 12-18 months
Citi Bank is no little bank. Citi is top tier, and one of the "Big Four" banks in the US, along with JPMorgan Chase, Bank of America, and Wells Fargo.
What analysts at Citi just said about gold should make everyone stand up and take notice.
They're saying gold could hit a whopping $3,000 per ounce within the next year or so. Let's break down what that means and why you should care.
The News
First, a quick recap: A team of analysts at Citi, led by Aakash Doshi, put out a report highlighting that under certain conditions, we could see a massive surge in gold prices. Now, this isn't their baseline prediction – they do have a more conservative forecast. But they basically outlined a scenario where gold could jump by 50% from where it's trading today!
What Needs to Happen
Okay, so what would it take for this $3,000 gold dream to become a reality? Citi points to a few major triggers:
Central Banks Go Gold-Crazy: If central banks around the world massively ramp up their gold buying, it could drive up demand and prices.
Recession Strikes: A deep economic downturn could lead to investors turning to gold as a safe haven, pushing the price way up.
Dollar Doldrums: If there's a crisis of confidence in the US dollar, people often flock to gold, again causing a spike.
If this happens and that happens then gold prices could spike. We’ve heard it all before. But this time may be different.
For two years we’ve been hearing about a recession that hasn’t materialized. Talking heads in the financial world have thrown in the towel on recession and stopped talking about it but I think they’re premature. I wrote about this in my Weekly Wrap newsletter about how there’s still too much money in the system from stimulus measures during the pandemic.
We just got the employment report from the BLS which shows the job market is hot with low unemployment. Every recession is preceded by low unemployment which skyrockets higher as the recession sets in. The pattern repeats itself, without exception. Go read that article for a detailed discussion of what’s going on.
So trigger #2, a deep economic downturn is very likely.
What about trigger #1, central bank gold buying?
According to the World Gold Council, central banks globally bought over 1100 tonnes of gold in 2022 alone – the highest level in over 50 years.
Who's Buying: China, Russia, Turkey, India, and several other nations have all significantly increased their gold reserves in recent years.
Major motivations for buying are:
Diversification away from US dollar reliance
Safe-haven asset in times of uncertainty
Hedge against inflation and currency risks
Increased central bank buying is a real possibility and here’s why:
Geopolitical Tensions: Russia's invasion of Ukraine and strained global relations fuel distrust of traditional reserve currencies, making gold more appealing for central banks.
Economic Worries: Inflation fears and the potential for recession incentivize central banks to bolster their holdings with an asset traditionally seen as stable.
Emerging Market Strength: As nations like China, India, and Turkey gain economic power, their central banks may continue to accumulate gold to reflect their growing influence.
How this connects to the $3,000 price prediction:
Demand Shock: If central bank gold buying accelerates rapidly, as Citi suggests, it could create a huge surge in demand that outpaces the supply of newly mined gold.
Market Psychology: Seeing central banks scrambling for gold can make individual investors more likely to follow suit, further boosting demand and prices.
Important Caveats
Before you go sell everything you own to buy up gold bars, a bit of caution. No one has a crystal ball, not even Citi analysts. Their prediction is based on "what ifs" and those don't always happen. Also, gold prices are volatile – they go up, they go down.
The Takeaway
The real takeaway here isn't the $3,000 number itself, but the reminder that gold plays an important role during uncertain times. The Citi report is a signal for both gold stackers and investors to pay attention and consider how precious metals might fit into their overall strategy.
Disclaimer: I am not a financial advisor, a CPA, or an attorney qualified to give financial advice. Nothing I say is meant as professional or financial advice. I'm just a guy on the internet, talking about precious metals. This is for entertainment only. If you're looking for financial, tax, legal, or other advice, please seek out a professional. It's worth acknowledging that I make mistakes frequently, so please take that into consideration.