“Gold Will Likely Soar To A Record Within Five Years”

“Gold will likely soar to a record within five years as asset bubbles burst in everything from bonds to credit and equities, forcing investors to find a haven”, reported Bloomberg last week, quoting Old Mutual Global Investors’ Diego Parrilla.

The metal is at the start of a multi-year bull run with a “few thousand dollars of upside” in a world of “monetary policy without limits” where central banks print lots of money and low or negative interest rates prevail, said Parrilla, who joined the firm as managing director of commodities last month. He’s worked at Goldman Sachs Group Inc. and Bank of America Merrill Lynch.

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“As some of the excesses in other asset classes get unwound, gold will perform very strongly,” said 43-year-old Parrilla, who has almost 20 years experience in precious-metals markets. The “perfect storm scenario will mean that gold will perform best when other classes are doing worst.”

While gold has climbed 24 percent this year amid low or negative rates, it slumped more than 40 percent from its record in 2011 through the end of last year to what Parrilla called “very oversold, very distressed” levels. With the downside only a few hundred dollars, the risk-to-reward ratio is extremely asymmetric and skewed to the upside, he said in an interview on Sept. 14.

In the first of two monetary-policy announcements on Wednesday, the Bank of Japan shifted the focus of stimulus from expanding the money supply to controlling interest rates, which some economists deemed as further evidence that BOJ policy had reached the limits of its effectiveness. The Federal Reserve is also due to make a policy decision, with traders seeing the probability for an interest-rate hike at only 22 percent.

Gross, Singer
Parrilla joins a slew of investors who are bullish on gold because of low borrowing costs and central-bank bond buying. Billionaire bond-fund manager Bill Gross has said there’s little choice but gold and real estate given current bond yields, while Paul Singer, David Einhorn and Stan Druckenmiller have all expressed reasons this year for owning the metal.

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Mark O'Byrne

I founded GoldCore more than 10 years ago and it has been my passion and a huge part of my life ever since. I strongly believe that due to the significant macroeconomic and geopolitical risks of today, saving and investing a portion of one’s wealth in gold bullion is prudent. I have been an Executive Director in GoldCore since its foundation and today I am Marketing and Research Director. As our customer base grew both domestically and internationally we were receiving a steady stream of requests from our clients and wider public for detailed analysis of the precious metals market. To meet this demand, I stepped into the Research Director’s role and am responsible for helping to inform and educate our clients and followers on how to protect and grow their wealth through owning gold and silver bullion.