Gold prices could triple in the current economic environment, with gold miners seeing significant gains as well, according to some experts. An exec at Crescat shared the firm’s latest analysis of the gold market during. recent interview. The firm expects gold prices to rise at least threefold, citing strong performances in similar environments. Its experts also suggest that cash-rich miners should emulate successful energy companies by investing in future growth, putting money back into the ground to increase production.
The current economic climate is causing a shift towards focusing on profitability, and investors will increasingly allocate capital towards miners. It is also expected that there will be a domino effect to occur in the equity markets, leading to adjustments in multiples, and suggests the cyclically-adjusted P-E ratio for the S&P 500 will need to come down. On the industrial demand side, the report anticipates that deglobalisation and on-shoring will drive gold and other commodity prices higher for years to come.
Gold could also play a more important role as an inflation hedge, and as a means for central banks to shore up their reserves. According to the report, gold accounted for 70% of central banks’ overall international reserves in the 1970s, compared to less than 20% today. It also shows that, due to the turmoil in credit markets, central banks are increasingly looking to improve the quality of their reserves, and gold is the only neutral asset that has a credible history to fulfil that purpose.
The report places an emphasis on the value proposition for investing in mining companies is becoming more compelling, as they are undervalued, even before the anticipated gains from gold.
Pan Finance is a print journal and news website providing worldwide intelligence on finance, economics and global commerce. Known for our in-depth analysis and opinion pieces from esteemed academics and celebrated professionals; our readership consists of senior decision makers from across the globe.