VanEck Sees $3,000 or More for Gold

Gold prices have surged in recent weeks and the team at VanEck, a firm with more than 50 years of experience investing in gold and gold equities, is reasserting its bullish call on the investment case for gold.

VanEck initially took a bullish stance on gold in mid-2019, pointing to sustained Central Bank uncertainty, the surge in negative yielding debt, and gold’s recently having broken through a strong technical six-year mark at the time. Much has obviously happened since then, and in the firm’s latest assessment they find a number of key reasons to reassert their bullish view as gold moves past its previous all-time high.

“Since 1968, when gold was $35 per ounce, the drivers of gold bull markets have fallen into two categories: inflationary and deflationary,” said Joe Foster, Portfolio Manager for the VanEck International Investors Gold Fund (INIVX). “We don’t see inflation spiking anytime soon, so we believe this to be a deflationary cycle. Both recent deflationary gold bull markets suggest that a price over $3,000 per ounce is reasonable. In fact, if one measures the start of this bull market from the 2015 lows, then it appears similar to the 2001-2008 bull market when gold rose over 200%.”

“If one believes, as we do, that the current central bank stimulus to fight the impacts of the COVID-19 virus, along with elevated levels of systemic risks, are similar to those during the global financial crisis, then $3,400 may be the target for this bull market,” added Foster.

According to VanEck, in the current deflationary bull market, low interest rates and the unknown economic impact of the COVID-19 pandemic have been driving the recent investment demand for gold; but other factors, like the weakness of the U.S. dollar, geopolitical uncertainty, and continued rising debt levels have bolstered a bullish view as well. In addition, gold may be poised to perform well should inflation develop eventually, due to the massive stimulus measures taken by central banks and governments worldwide.

“Along with the persistence of negative real rates, we believe many dynamics appear very favorable for gold and gold equities moving forward,” added Jan van Eck, Chief Executive Officer. “Gold continues to be a scarce commodity, and the fact that there have been no significant new gold discoveries since 2016 only adds to its supply pressure. Meanwhile, gold mining companies have reemerged from a period of management turnover and fiscal restructuring and are, in our view, now better positioned to return value to shareholders.”