Gold prices have hit all-time highs, but industry heavyweights Jim Rickards, best-selling author, and Peter Schiff, CEO of Euro Pacific Capital, both think that the rally is far from over.
Rickards’ analysis points the gold price to $15,000 by 2025.
“I would put [gold at $15,000 an ounce before 2025,” Rickards told Kitco News. “If you just take the average of the prior bull markets: 1971 to 1980, nine years, 2200%, 1999 to 2011, a twelve-year bull market, about 700%. Just take the average, you don’t have to go to the higher of the two or extrapolate, if you just take the average of the two you would say the next bull market is going to be a little over 10 years and it’s going to go up 1500%,” he said.
$15,000 is the implied, non-inflation price of gold should a gold standard be adopted, theoretically speaking, said Rickards.
Schiff pointed out that historically, the Dow/gold ratio has seen much higher levels than today, suggesting that should the ratio retrace historic levels, the gold price should be much higher.
“Another way to look at it is to just look at the price of gold in relation to the Dow Jones, because you have historical reference points where twice in the prior century at significant bear market lows, the Dow traded down to a single ounce of gold: 1932 the Dow Jones was roughly equal to an ounce of gold, and in 1980, the Dow was roughly equal to an ounce of gold,” Schiff said.
Schiff added that at the current levels of the Dow Jones, the price of gold will have to equal $26,000 an ounce to achieve a 1:1 Dow/gold ratio.
Both Schiff and Rickards agreed that a major retracement in gold prices during the current bull market has already happened, and that another significant pullback in prices is unlikely to happen.
Author: David Lin