Currently, major banks are outdoing each other with aggressive gold price forecasts. We recently reported that Bank of America sees the possibility of the yellow metal rising to $4,000 in the second half of the year. Now JP Morgan follows suit and declares $6,000 per ounce of gold realistic, albeit only by the end of US President Trump’s current term. That would be an increase of almost 86% from the current level!
And as the experts explain, in the current macroeconomic environment, it wouldn’t take much to achieve this, but merely a small shift from US assets into the gold market. If only 0.5% (!) of US assets held by foreign investors were invested in gold, according to JP Morgan, it would mean an annual return of 18% and ultimately drive the gold price to $6,000 per ounce. The analysts calculate an inflow of $273.6 million over four years, which would correspond to 2,500 tons of the precious metal.
Even Small Reallocations Could Have Enormous Effects
This may not seem like much, accounting for only about 3% of total gold holdings, but according to JP Morgan, it would have enormous effects on gold demand on a quarterly basis. Since the supply of gold is relatively stable, even a tiny increase in demand could lead to a large price swing, they said. This is why the analysts believe that the yellow metal still has further potential even after the price rally of recent years – especially given the still globally significant geopolitical and economic uncertainties. (Even if signs of easing are visible on several “fronts” today.)
In any case, the US major bank believes that the new US administration’s plan to make other countries that benefit from the US dollar’s status as a reserve currency pay (tariffs) has alarmed foreign investors, making gold even more attractive as a safe haven. Accordingly, JP Morgan now expects the gold price to reach $3,675 per ounce by the end of this year, rising to $4,000 by the second quarter of next year. However, it would take a bit longer to reach $6,000 per ounce of gold…
Strong Tailwind for the Gold Industry
For the gold sector, gold producers, gold prices at such heights would of course be a license to print money – even now the industry is already in a very good position – and then, we are convinced, gold explorers would also rise across the board at the latest. So far, it’s rather selected stocks that are making their way up.
Sranan Gold (CSE: SRAN; FRA: P84), which we have been observing on Goldinvest.de for a short time, for example, has already gained around 58% since the beginning of the year, while Formation Metals (WKN A3D492 / CSE FOMO) is already up 67%, and Goliath Resources (WKN A2P063 / TSXV GOT) has even doubled since the start of the year!
