A few years ago, the idea that gold prices could reach 10,000 USD/ounce was once considered unrealistic. However, this scenario is now gradually becoming feasible as global debt continues to increase and create structural changes in the geopolitical context, according to a market strategist.
In an interview with Kitco News, Ms. Chantelle Schieven - Head of Research at Capitalight Research - said that with the increasing level of uncertainty in the global economy, it is not unlikely that gold prices will reach 10,000 USD/ounce in the next 5 to 7 years.
She believes that with the current rate of increase, if this trend continues, gold prices may reach that milestone around 2029. According to her, the important question is whether this increase needs a major shock in the global environment or whether the current structural forces are sufficient to maintain the upward momentum of gold.
According to Schieven, the strength of precious metals comes not only from traditional macroeconomic factors but also from profound changes in the global financial and political systems.
She said that recent fluctuations in gold prices are partly linked to geopolitical instability and new developments in the market. In February alone, there were only four trading sessions where gold prices fluctuated below 50 USD in both directions, while there were 12 sessions where prices fluctuated above 100 USD.
Despite strong fluctuations, Schieven believes that long-term investors still benefit from the overall upward trend of gold prices. Individual long-term strategists are often more advantageous than short-term traders who try to take advantage of price fluctuations during the day.
She believes that the long-term momentum of gold is still rising. Recent price movements have also reduced some speculation activities in the futures contract market because traders have difficulty predicting short-term fluctuations.
Although the price of precious metals is still in the accumulation phase, Schieven believes that the risk of deep decline for gold and silver is quite limited. She does not believe that gold prices will fall below 5,000 USD/ounce or silver prices will fall below 60 USD/ounce.
According to her, a major change in geopolitical sentiment is needed to end the current upward cycle, but she does not see it coming soon. At the same time, she also does not expect global government debt to fall soon.
In addition to short-term political developments, Schieven believes that the gold price increase also stems from deep structural changes, which began to accelerate after Russia attacked Ukraine and subsequent Western sanctions.
These sanctions have caused many countries and investors to reconsider the level of safety when holding assets valued in USD or assets in the Western financial system.
According to her, that is the time when central banks, governments and the super-rich begin to consider not holding too much USD assets because they may be frozen. Meanwhile, gold does not carry partner risk.
Schieven also believes that the increasingly high global debt level is limiting the ability of central banks to tighten monetary policy strongly. When public debt, personal debt and mortgage costs are all high, policymakers have very little room to raise interest rates without putting great pressure on the economy.
She said that central banks are currently in a difficult position, because raising interest rates too high is no longer a feasible option in the context of a large debt burden on the financial system.
She believes that the loss of trust between governments around the world may last for a long time, as countries are increasingly tending to withdraw into regional economic blocs and strategic alliances.
According to Schieven, the combination of geopolitical risks, rising global debt and political polarization is creating a favorable foundation for gold.
She said that the current context is like having storms everywhere and gold is an asset benefiting from that uncertainty.
She also noted that as gold prices rise, silver may attract stronger participation from individual investors. Many people no longer have the ability to buy gold but still want to invest in precious metals.
According to her, for many investors, silver often becomes a starting point to access the precious metal market at a more accessible price.
Although acknowledging that accurately predicting the timing for the next major increase in gold is difficult, Schieven believes that structural factors driving the market to increase in price currently show that the long-term trend of the precious metal is still solid in a upward direction.
