As the world economy faces an unprecedented crisis due to the COVID-19 pandemic, gold is being perceived as the beacon of financial stability. But how high can gold prices go amidst such volatile and uncertain times? A crucial insight comes from the mining industry’s billionaires, who have been surprisingly candid about their gold price predictions.
Eric Sprott, a renowned billionaire precious metals investor, gave an optimistic prediction during a webinar organized by the Denver Gold Group. Sprott stated that surpassing the level of $2,000 per ounce is inevitable given the current circumstances. His optimistic view is based on the premise that central banks worldwide are resorting to excessive money-printing to support economies hit hard by the pandemic. Such monetary inflation typically leads to an increase in gold prices.
Similarly, Thomas Kaplan, another billionaire mining magnate, shared his bullish predictions in an interview with Bloomberg. He highlighted that gold is not only a hedge against inflation but also a hedge against fear. In times of financial and geopolitical uncertainty, the appeal of gold increases. Kaplan predicted gold prices to reach $3,000 to $5,000 per ounce within a decade. He stated that what might seem immoderate in normal circumstances is not in abnormal scenarios, such as the current global situation.
Juniors are smaller mining companies that usually benefit greatly when the gold price is ascending. Billionaire Kerimov’s Polyus, Russia’s largest gold production company, is one of these junior miners. For these smaller firms, the cost of producing an ounce of gold is already high. Rising gold prices not only mitigate these production costs but also bring lucrative profits. The firm is therefore bullish on the gold outlook and supports Sprott’s and Kaplan’s forecasts.
However, it’s crucial to remember that predictions are based on current factors and can change with geopolitical events, new discoveries, and shifts in consumer behavior. Pierre Lasson, the billionaire founder of Franco-Nevada Corporation, has noted that while the present macroeconomic backdrop is highly conducive for gold, a sudden technological revolution, such as a breakthrough in gold extraction techniques or an asteroid mining mission, could dramatically alter the supply scenario, thereby influencing the prices.
Continuing on the unpredictability theme, Brazilian billionaire Eike Batista points to the famous Buffett’s law — gold has no utility and an investor only purchases with the hope of selling it to someone else at a higher price. However, Batista acknowledges that this may not deter those who perceive gold as a financial safety-net and are willing to pay a premium price for it.
Referring to the unpredictability of prices, Steve Holland, Founder of Luna Gold, vividly illustrates, in the gold world, you need to be continually walking forward whilst looking in the rear-view mirror. Hence, while the forecast by billionaires provides a positive trajectory, individuals must have a balanced outlook considering their investment goals and risk tolerance levels.
In conclusion, the consensus from mining billionaires is relatively optimistic, with gold price predictions ranging from $2,000 to potentially $5,000 per ounce. However, a cautious outlook is advisable given the dynamic and highly unpredictable nature of gold prices. Accordingly, investors should stay informed and be prepared for any sudden shifts in the market.
