"I do think we'll hit another record high, but the studies that I use also predict that then we'll begin another multi-year corrective period," said Gary Wagner of TheGoldForecast.com.
Gary Wagner: Gold Will Hit a Another Record, but Rally Close to Final Legyoutu.be
The US Federal Reserve is hiking interest rates in a bid to curb inflation, but according to Gary Wagner, executive producer at TheGoldForecast.com, that's not what will tame high prices.
Speaking to the Investing News Network at the recent Vancouver Resource Investment Conference (VRIC), Wagner, who also writes for Kitco Media, explained that supply chain issues are a bigger part of the problem.
"We've never had a point when we've had this kind of inflationary pressure and not had interest rates that are at least half to three-quarters the level of inflation. In other words, if inflation's running at 10 percent, interest rates are running at 5 to 8 percent," he said during an interview on the sidelines of the show.
"The second issue is the underlying cause of inflation is supply chain issues. The Federal Reserve can raise interest rates to 30 percent and it won't affect it because inflation is running hot in energy and food — these are daily items that are absolutely necessary, and so no matter how high they raise rates ... it won't address it."
Many market participants are questioning why the gold price isn't higher given these and other circumstances, but Wagner reminded investors that it remains historically high and is successfully retaining its purchasing power.
"When you look at this grandiose timeline, gold has always maintained a very, very close tie between what you could get with it — whether it was 1900, 1950, or the 2000s or current pricing," he said. "If you look at it in any instant moment, there's times when it goes out of whack; it's very much a lagging indicator in terms of it catching up. But over time it has always maintained a very, very stable buying power for goods and services."
When asked where the yellow metal may go moving forward, Wagner said he thinks it is close to the final leg of a multi-year rally that started at the beginning of 2016.
"My projections are anywhere between US$2,150 and US$2,200 (per ounce). I don't think it's going to US$3,000, US$5,000 or any astronomical number. I do think we'll hit another record high, but the studies that I use also predict that then we'll begin another multi-year corrective period."
Watch the interview above for more from Wagner. You can also click here for our full VRIC playlist on YouTube.
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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.
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