gold bars stacked

Gold could set a new all-time record of $2,000 per ounce in the next two years according to analysts at Citigroup. In their latest research note, economists at the American investment bank said the decline in US economic growth and that of the wider world could see the current strong demand for gold continue.

Combined with inevitable Federal Reserve interest rate cuts and a likely weakening of the US Dollar, the experts believe there is plenty of upside for the yellow metal as a safe haven investment hedge to diversify portfolios with.

The current record price for gold is $1,896.50; set back on September 5th, 2011. Gold has so far peaked at $1,546.10 in the past 12 months, but the strong US Dollar against the basket of other international currencies has seen new record prices set for gold when valued in Pound Sterling, Euros, Australian Dollars, and Indian Rupees.

Safe haven demand has been the main attraction of gold for investors to date, and with Treasury bonds now yielding little to no gains (and even offering negative yields in some cases), gold is arguably becoming the best asset to pursue at present.

gold inflation chart

Speaking to CNBC’s “Street Signs” financial segment last Friday, Mark Mobius of Mobius Capital Partners announced that “Physical gold is the way to go”, citing his expectation that the US will see an increase in the supply of money into the economy via the Federal Reserve.

Mobius continues, pointing to the fact that President Trump is keen on a weaker Dollar for trading purposes and reducing debts, saying: “They [the administration] are certainly going to try to weaken the dollar against other currencies and of course, it’s a race to the bottom. Because, as soon as they do that, other currencies will also weaken.

“People are going to finally realize that you got to have gold, because all the currencies will be losing value”.

In preparation for a global downturn as part of the classic ‘boom and bust’ financial cycle, central banks have been buying gold at a record rate in the past 18 months, with Russia and China – both critics of the US and their ‘weaponisation’ of Dollar-denominated debts, leading the pack with their purchases in an attempt to substitute as many Dollar reserves as possible. To date, over 374 tonnes of gold have been bought by central banks – the largest increase for the first half of a year since 2000.