Most people realize that mainstream financial institutions don’t like gold. In many cases it’s because they can’t make money selling investors on gold, whereas they can make commissions every time an investor buys or sells stocks, bonds, mutual fund shares, etc. In other cases it’s because they just don’t know how important gold can be to a well-diversified financial portfolio, or how gold can protect your retirement savings against inflation and financial crisis. So when mainstream financial corporations start talking about how great gold will perform, you know that it’s going to perform well.
Bank of America recently pushed its gold price target to $3,000, up from $2,000. That’s a huge jump, but the reasoning for it isn’t entirely surprising. With the Federal Reserve engaging in essentially an unlimited amount of quantitative easing, the federal government spending trillions of dollars of money that it doesn’t have, and the prospects for inflation and even hyperinflation growing every day, the dollar is going to get pummeled, and dollar-denominated financial assets along with it.
That’s why Bank of America thinks that gold will average about $1,700 an ounce this year, and over $2,000 an ounce next year. And in a best-case scenario (for gold), $3,000 an ounce isn’t out of the question.
Given the unprecedented amount of financial intervention and monetary creation that is being done right now, it would be hard for anyone to deny that demand for gold is going to rise. We haven’t even really seen the worst effects of the economic shutdown, nor of the recession that was bound to come anyway. Stock markets seem to be shrugging off all the bad news for now, but within the next few months they’ll continue their downward trend as the reality of the sinking economy sets in.
Losses of 50% or more on major stock indices can’t be counted out, and a Great Depression-like 80% crash isn’t outside the realm of possibility. With tens of millions of Americans out of work, supply chains completely disrupted, and no idea when any of this will end, 2020 is set to be a very bad year for financial markets.
Those same factors will make 2020 and beyond another great time for gold. In the three years after the 2008 crisis, gold nearly tripled in price, setting a record high of over $1,900. And with the coming economic crisis looking likely to exceed 2008 in its severity, it’s only natural that gold is set to exceed that record high price. If you haven’t already invested in gold to help protect your retirement savings, now’s the time to start thinking about it.