We are fighting a third world war against the pandemic, an unprecedented event, and monetary policy response is set to drive gold prices to levels never seen before, this according to Frank Holmes, CEO of U.S. Global Investors.
“We still have negative real interest rates and that bodes extremely well for gold, so I think gold can be easily $2,700 like palladium was last year. It can be $5,000. I don’t know when the money printing stops, but it could be $10,000 to get the global economy back and functioning,” Holmes said.
Holmes’ comments come as the Federal Reserve recently announced $2.3 trillion in stimulus programs aimed at businesses and households, but the money printing won’t stop there, he said.
“What I do see is that the U.S. will spend over $10 trillion. Both the Senate, and Trump and Congress will spend $5 trillion when this is finished. We’ve seen the Federal Reserve also commit $5 trillion of expanding their balance sheet, so this is going to be unprecedented,” he said.
Gold prices’ response to this stimulus could mirror its pattern following the financial crisis of 2008, Holmes noted.
“This is going to create unprecedented growth in paper money, and what you’re going to see is like 2008 and 2009, gold ran up, sold off, got a base and all of a sudden it started to march up, as this money printing took place,” he said.
Holmes added that the pandemic has caused a global supply chain disruption that will also affect the gold industry.
“I think there’s huge supply disruptions around the world and I think that demand for gold is going to pick up much faster than the supply of gold is going to be coming out,” he said.
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