Is Gold a Buy at US$2,000?

Why is the gold price rising?

Shree Kargutkar, managing partner at Sprott (TSX:SII,NYSE:SII), told the Investing News Network (INN) that there’s a psychological aspect when it comes to the US$2,000 mark that captivates the market.

He said the same thing happened when gold reached US$1,000 over a decade ago.

However, Greg Taylor, chief investment officer at Purpose Investments, pointed out that while US$2,000 is seen as a “magic number” for investors in North America, the metal has already been breaking records in international currencies.

Taylor said the run in gold comes amid concerns about the broader health of the financial markets.

“I think this is kind of an inflation story,” he said, noting that a segment of the investor class is growing frustrated with the tactics used by central banks, like excessive money printing and stimulus events.

“But it's also bordering on people with questions about the health of the financial system, and just the amount of money printing and looking for assets that are not subject to the whims of central bankers,” he said.

Should investors buy gold at US$2,000?

Investors are often told to buy low and sell high, but the current situation is tricky — gold is close to its highest price ever, but many market watchers believe its run has only gotten started.

Joe Cavatoni, chief market strategist, Americas, at the World Gold Council, told INN that it's important for investors to take a strategic approach when it comes to gold. This can help alleviate the pressure of high prices.

“A high price may or may not necessarily be an impediment for someone who’s making a strategic allocation to gold,” he explained. "The price point is important, but also more important than that is how does (gold) behave when things are moving in the future, and how is that going to add to your overall portfolio of return."

For his part, James Henry Anderson, senior market analyst at SD Bullion, said he recommends buying gold in tranches. This approach of dollar cost averaging is a way to avoid overspending at any one point. “Ultimately you want to kind of ease your way into it, but also not buy in such small volumes that you’re paying a huge (amount in) premiums,” he said.

He also encouraged investors to plan their strategy surrounding bullion with a long-term view. “If I was simply going to take a fifth of my liquid net worth and move it into bullion, I wouldn’t do it all in one move, I would do it in multiple tranches and I would take my time. I would do it in maybe five tranches, let's say over a half year’s time roughly,” he said.

Jeff Clark, metals and mining analyst at TheGoldAdvisor.com, said those buying gold as an investment should be clear on their strategy for the commodity 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,” he said.

Similarly, Jordan Roy-Byrne, editor and publisher of TheDailyGold, told INN it's important for investors to be realistic — there’s no space for dreaming of selling at the highest peak for gold, or jumping in at the very bottom.

“Even as a tactical person, you’re never going to buy the bottom or sell at the top,” he said. “Nobody can do that.”

How high will the gold price go in 2023?

Experts and investors alike see gold's price rise as a market-altering event, but there's no clear answer on whether US$2,000 is truly the metal's new reality or if it's merely a blip in the grand scheme of things.

However, big price predictions are gaining steam. “What if US$2,000 gold is low? What if gold is going to US$2,500? What if it’s going to US$3,000? Those levels are definitely possible this year,” Clark told INN in April.

Anderson said he’s taking a five to 10 year approach because in that time span “US$2,000 an ounce gold is going to be looked at as US$250 an ounce gold — it’s going to be looked at as real value, not a bad play.”

For his part, Doug Casey of InternationalMan.com argued that when it comes to stability and future-proofing investments, gold will always beat out currency risks, interest risks, default risks and other stock market concerns.

“Stocks are still overpriced," he asserted.

Speaking to INN in September, Mike Larson, editor-in-chief at MoneyShow, said gold is one of the asset classes he is optimistic about and expects the yellow metal to have a positive finish to 2023 that will roll into 2024.

“Overall, if you're at the end of the Fed hiking cycle (which I believe we are), and if there is the potential for the Fed to start reversing some of those hikes next year (which I believe there is), it is a more bullish environment for gold,” Larson.

Right before October's test of the US$2,000 level, EB Tucker of the Tucker Letter shared with INN where he sees the precious metal going in the last months of 2023 and into the new year. "I personally think that the gold price is set to move 10 percent. I think it's going to US$2,150, maybe up to US$2,200 in the next 90 days,” Tucker said.