Is a US$10,000 gold price attainable? Nick Barisheff of BMG Group explains how that level could be reached in the future.
The gold price has cooled since its summer run above US$2,000 per ounce, but it could move far beyond that level in the future if the circumstances are right.
That’s according to Nick Barisheff, president and CEO of BMG Group. Speaking to the Investing News Network, he explained how the yellow metal could run past US$10,000 or even further.
“Basically if you look over a reasonable timeframe, the price of gold and the total amount of US debt is correlated, so they would go up together,” he said. The two fell out of sync in 2011, with gold correcting while US debt kept growing, but Barisheff said the relationship remains.
Pension funds, virtually none of which hold gold, are another key factor in the equation.
Barisheff said many of them were “grossly underfunded” before COVID-19 hit, and are now facing major hits because of their exposure to large shopping centers and big office buildings — both of which have faced decreased use due to coronavirus-related lockdown measures.
“If those pension funds were even to allocate 1 percent to gold, which isn’t much of a push, then you’re going to get well beyond the US$10,000 because mine supply is going down,” he said.
“There’s only so much gold available, and when you start trying to buy it up in that kind of volume, you’re going to drive the price up,” added Barisheff, who is also the author of “10,000 Gold.”
BMG Group has three mutual funds, sells bullion bars to high-net-worth clients and also recently started a hedge fund. When asked how investors should get exposure to gold, Barisheff advised staying away from a traditional portfolio allocation, which is 60 percent stocks and 40 percent bonds.
“People always talk about (how) it’s good to be diversified and have a balanced portfolio, but they only have three asset classes — they typically don’t have commodities, real estate or precious metals, so it’s obviously not diversified,” he said. In his opinion, 10 to 20 percent is a good amount to allocate to gold, although he emphasized that each person is different.
Watch the interview above for more from Barisheff on gold and its future path.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.