Why “Outrageously High” Gold Price Predictions Are Not B.S.

by Peter Reagan, Big League Politics:

This week brings us gold price forecasts you could call outrageous, ranging from $3,000 to $40,000 per ounce. Outrageous, that is, until we remember that there’s no actual limit on gold’s price…

This week, a video-heavy installment of Your News to Know rounds up the latest big stories involving precious metals and the overall economy. Stories include: Why there’s no such thing as an “outrageously high” gold price prediction, speculation on short-term gold price manipulation and gold’s shift from global commodity to global money.

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$7,000 to $40,000 gold isn’t a fantasy – here’s how (and why) it could happen

Now that $3,000 gold is a standard Citi forecast, we might want to see what the real upside is about. These days, we can find forecasts ranging from $7,000 to $40,000, and they aren’t issued by random people on X, but well-regarded industry analysts.

Whenever I see a truly astonishing gold price forecast, I remind myself of something noted economist Kenneth Rogoff wrote back in 2016:

Gold, despite being in nearly fixed supply, does not have this problem, because there is no limit on its price.

This is usually paraphrased by the randos on X as:

“There is no limit on gold’s price.”

That’s fairly close to Rogoff’s actual words – which were presented in the context of advising emerging nation central banks to buy gold.

Why?

Well, essentially, because it’s the only financial asset that cannot go to zero.

According to Rogoff, it’s also the only financial asset that can go to infinity. (At least when measured in terms of currency.)

Consider reading Rogoff’s original article — and, if you find yourself feeling skeptical, remember he’s a Harvard economist, former chief economist of the International Monetary Fund (IMF), a former economist for the Federal Reserve, co-author of the fantastic book This Time Is Different and a chess grandmaster. He’s a smart guy.

Recently, Luke Gromen, founder and president of research firm Forest for the Trees (FFTT), explained to Kitco why $7,000-$15,000 is his gold price to watch.

Gromen is straightforward: He says that, if you listen, the official sector openly claims that the U.S. dollar is being devalued deliberately. Gromen believes the federal government wants a weaker dollar. This would make foreign imported goods significantly more expensive – and conversely, make exported U.S. products more affordable. A weaker dollar would arguably help the nation return to an export-based economy.

Remember when Donald Trump said back in 2016 that he wanted a weaker U.S. dollar for trade advantages? That’s why.

The U.S. economy, once known as an exporter of top-quality goods, now primarily exports nothing but debt. So the reason is there, as well as an open concession. The U.S. monetary authorities want a weaker greenback, considerably so. How much? Gromen lists a range of $7,000-$15,000 for gold based on this, but still doesn’t believe the greenback will be replaced.

So does Daniel Krupka, Head of Research at Coin Bureau, who finds the end of the petrodollar agreement to be almost a non-event.

So instead of even just losing its global reserve status, let alone being evaporated totally, we might be looking towards a deliberately weaker U.S. dollar but elsewhere unchanged in its role. Is it that strange of an idea? If Japan can get away with hammering the yen to a 1:157 ratio against the greenback, why couldn’t the U.S. afford to drop it to a third of its value? And that is all that would be needed for Gromen’s forecast to materialize, which he expects to happen around 2030.

On the more extreme side we have Lynette Zhang saying that gold could go as high as $40,000. But how extreme is it? In her very elaborate overview, Zhang notes that $40,000 gold is actually its fundamental value relative to U.S. dollars and U.S. debt.

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