Is Gold a Buy at Over US$3,000?

Why is the gold price rising?

Will Rhind, CEO of GraniteShares, told the Investing News Network (INN) that one of the biggest drivers of gold’s steady climb over the past two years has been what he calls the "fear premium."

“In other words, the fear that would really ultimately motivate investors to get out of equities, to get out of other assets and buy gold,” Rhind explained in an April interview. "Now the ‘fear premium’ is really starting to get baked in, and investors are really, for the first time, beginning to worry about the return of their capital as opposed to the return on their capital. And that’s typically the time you see people the most motivated to buy gold.”

Many of the gold market analysts INN has spoken with this year agree that what’s behind that fear in 2025 is just how much damage US President Donald Trump’s tariff war could ultimately have on the stability of not only the stock market, but also the American bond market and the overall health of the global economy.

That includes Ole Hansen, head of commodity strategy at Saxo Bank, who told INN that he sees gold becoming the pinnacle safe haven in this environment. “After this tariff bazooka from Trump, we’re seeing some significant selloffs in the equities markets, and we’re seeing unrest in the bond market as well, with the yields rising even on days when the equities were falling," Hansen said, adding that investors are struggling to decide where to park their money.

Outside of the fear premium, Rhind also pointed to another factor pushing investors out of other assets and into gold: global money supply. He advised investors to consider the ratio between the gold price and M2 money supply.

“If you look at a chart that tracks the global money supply vs. the price of gold, you’ll see that the two have really moved very much in concert with one another,” Rhind noted in the conversation.

“The bigger picture to me is this idea that the paper money supply keeps increasing against gold. It's not necessarily about gold prices rising, it's about the value of paper currencies keeps falling in relation to gold.”

Should I buy gold now at US$3,000?

Investors are often told to buy low and sell high, but the current situation is tricky.

While gold has set multiple new highs in 2025, many market watchers believe its run has only just started.

Christopher Aaron, founder of iGoldAdvisor and Elite Private Placements, told INN that in February the ratio between the Dow Jones Industrial Average (INDEXDJX:.DJI) and gold broke a 45 year trend favoring stocks, a significant signal that may indicate the beginning of an upcycle where gold could “end up being a multiple of the current price.”

Aaron emphasized that a signal of this magnitude has only occurred three other times in the past century: right before the Great Depression, in the late 1960s before the breakup of the Bretton Woods gold standard and in the early 2000s.

Each of these periods resulted in a precious metals bull market.

“If you have no exposure to physical gold whatsoever, we’ve just seen this 45 year trend break in the Dow-to-gold ratio,” Aaron said in the April interview. “That tells me gold is going to be outpacing conventional equities for anywhere from three to 10 years, with a mean cycle average of eight years.”

Whether or not investors new to gold decide to get in at this price level should depend on their tolerance for risk and investment style. Aaron acknowledged that there is clearly more risk associated with investing in gold at US$3,000 compared to when prices for the precious metal were trading at the US$2,000 level a year ago.

However, for those with a long-term investment strategy and no gold allocation, there’s no time like the present. Most experts advise putting between 5 and 10 percent of your portfolio to commodities, including physical gold.

Jeff Clark, metals and mining analyst at TheGoldAdvisor.com, told INN earlier this year that those buying gold as an investment should be clear on their strategy and understand what role they want it to play in their portfolio.

“You’re not buying it as an investment, hoping it goes up … you’re buying it as insurance, as portfolio protection,” Clark elaborated.

How high will the gold price go in 2025?

Rhind of GraniteShares reiterated that the low ratio between M2 and gold is flashing signals that the price of gold today, while historically high, might actually have much more room to grow.

"In history, if the ratio is high, that means gold is overvalued, and when the ratio is low, that means gold is undervalued,” Rhind explained. “If you look at it now, we’re somewhere under the median, with gold being closer to undervalued rather than overvalued at a time when we just talked about gold hitting a new all-time high.”

For his part, Saxo Bank’s Hansen believes gold has a good chance to trade at US$3,300 for 2025. “Gold continues challenging record highs simply because we are in a very uncertain world right now,” he said.

Goldman Sachs (NYSE:GS) has a more bullish forecast for gold in 2025 as recession fears sink in.

Citing stronger demand for the precious metal from both central banks and exchange-traded funds, Reuters reported that on April 13 the firm raised its end-of-year gold price forecast from US$3,300 to US$3,700, with a projected range of US$3,650 to U$3,950.