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Gold could reach $2200 by year end and double in the next 3 years

By Jacob Wolinsky. Originally published at ValueWalk.

Gold Price Double

International Investment firm, EXANTE’s senior analyst, Victor Argonov say that the Gold price could double in the next three years.


Q2 2020 hedge fund letters, conferences and more

Gold Price Will Double In The Next Three Years

EXANTE’s senior analyst Victor Argonov says:

Gold can not only get back to its historic highs next month, but also rich $2,200 by the end of the year. At that, it won’t be a surprise if gold price will double in the next three years.

It has become the best investment of the year. Central banks’ inflow of liquidity into the financial markets has made the metal fundamentally attractive. It had been growing until August, then experienced a significant correction in September (-4%) and is now poised to grow again. The correction seems rather technical, encouraged by the need to fix the revenues. Now, the dynamic resembles what we saw during the global financial crisis. Back then, gold was going down on the back of market fears, yet in three years after 2008 it tripled in price, bouncing from the year’s lows. Now, the same preconditions and upward trends are in place.

Investors should look into exchange funds that track metals fluctuations. Global exchanges offer a variety of ETFs so you can pick the one that fits your strategy.

The U.S dollar is what the investors resort to when there’s a market collapse. That said, we’ve recently witnessed that the US monetary authorities always “come to the rescue”. Not without a glitch, but the economy will continue to recover, boosting the demand for primary goods and gold as a kind of inflation protection.

Uptick In The Russian rouble and the Turkish lira

The Russian rouble and the Turkish lira, which both have had a rough ride recently, made significant gains on Wednesday. There is no reason, we think, to believe that this is somehow related to the ongoing Armenian-Azeri conflict. The rouble received support from the publication of a government directive instructing at least three major Russian companies (Gazprom, Rosneft and Alrosa) to keep their FX assets at or below a certain historical level. This means that these companies have little room for buying FX and could even be forced to sell some of their FX holdings. In Turkey, the markets reacted favourably to the news that the government has cut withholding tax on new TRY deposit accounts.

Other EM currencies, such as the Mexican peso and the South African rand, also posted substantial gains on Wednesday. This could be a reflection of the markets expecting further US fiscal stimulus and perhaps also being more hopeful for Donald Trump vacating the White House soon.

GBP enjoyed another rally on the news that the UK negotiating team has achieved a compromise on fishing rights with its EU counterparts. The UK offered a 3-year transition period for any changes in fishing limits for EU fishing fleets. The news, however, could be something of a red herring given that the EU and UK delegations still need to achieve an agreement on state aid, which is the key sticking point.

Wednesday’s data releases for major economies were also mostly upbeat. The US pending home sales rose a record 8% MoM in August. UK house prices were up 5% YoY, which is the highest growth rate since 2016. China’s manufacturing PMI came out at 51.5 in September compared to 51.0 in August, a bit above expectations.

The post Gold could reach $2200 by year end and double in the next 3 years appeared first on ValueWalk.

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