Gold is about to experience a massive price rally, erasing its recent lackluster performance for investors smart enough to act now. At least, that’s the latest gold price forecast of Albert Edwards, head strategist at Societe Generale.
Gold certainly isn’t everyone’s favorite commodity at the moment. And the belief that the Federal Reserve is set to raise interest rates as early as September doesn’t help matters. Because gold doesn’t return interest or pay dividends like some other assets, higher interest rates make them even less desirable. This has put the “safe-bet” into an awkward market position, and convinced a great many analysts and traders that it’s to be avoided.
Edwards, however, sees the current market weakness of the yellow metal as only the prelude to a massive price rally. In a report obtained by Newsmax, the economist points out the financial fragility of Western central banks. He alleges that they have set themselves up for a crisis on a far larger scale than the one in 2008.
What will follow is plummeting interest rates and massive fiscal deficits, and then finally quantitative easing on a scale which will have investors flocking to gold. It will become the most sought-after commodity on the planet, and those wise enough to invest now will reap the benefits. (Source: SocGen’s Edwards: Buy Gold to Prepare for Massive Rally, July 30, 2015.)
How high could spot rates go? Edwards points out that every major decline in gold prices was followed by incredible rallies. For example, in the late 1970s, gold prices surged in value from $100.00 per ounce to more than $900.00. Between 2009 and 2011, gold prices nearly doubled in value, reaching a high of $1,917.90 per ounce on the back of global central banks slashing interest rates to buoy economic growth.
Historical data is certainly on his side, and if current patterns follow those between 1976 and 1980, it’s certainly conceivable that gold will surge up in value in the wake of financial crisis. If these historical patterns play out, Edward’s gold price forecast foresees spot rates hitting upwards of $9,900 per ounce.