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Gold: There’s no going back now – Velocity Trade Capital Research Commentary

Mar 23rd, 2020

We are launching Velocity Trade Capital’s research offering with a deep dive into gold and the potential ramifications of the evolving pandemic and the associated financial crisis (page 2). We also cover the broader picture, including key drivers of gold since 1975, and introduce a new model we use for our forecasts, based on US M2 and the historical levels gold has traded at in different macro environments.

Key points:

  • Our (financial crisis driven) bull case projects gold climbing to $2,000/oz by YE20, and a sustainable rise to +$2,500/oz by 2025, with peaks of +$3,000/oz possible. We see a similar playbook being employed by governments and central banks to that of the 2008 financial crisis, with a similar trajectory for gold in the aftermath.
  • Even before the pandemic, gold’s key price drivers were best aligned since 2009 – macro factors across the board indicate both short- and long-term upside. Even our pre-crisis base case saw gold rising steadily over the next 5 years.
  • A "return to normal” (or pre-2008 economics) now seems farfetched given the resumption of quantitative easing, the failure of monetary policy to generate growth and the coming debt explosion. The narrative has shifted from “kicking the can down the road” to acknowledging that this *is* the new normal.

The conditions that drove gold’s prior highs have returned,sadly this time with a human crisis alongside a financial crisis. Investors should be increasing gold weighting as a macro hedge and for leverage/growth via gold equities.

Happy to discuss further any time.



Michael Siperco
Senior Research Analyst, Global Metals and Mining

+1 416 323 2150


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