Predicting the future value of any asset or commodity is a guessing game most of the time. Everyone wants to see their preferred market go higher, but making it happen is very difficult. According to Christopher Wood, it is a matter of time until the gold price hits $5,000. A lofty target, given the current circumstances.
Christopher Wood Remains Bullish
Even though the past few weeks haven’t been easy for the precious metals markets, things are not looking all that bleak. There is still a lot of financial uncertainty affecting all traditional markets. Stocks, treasuries, and bonds are still unlikely to recover bar for some minor uptrends. In theory, this paves the way for much higher precious metals prices, but that isn’t always the case.
If Jefferies’ global head of equity strategy Christopher Wood is to be believed, things will improve. Not for traditional markets by any means, as the Fed’s printing press has caused irreparable damage. As far as the gold price is concerned, Wood is convinced the surge to $2,000 and beyond is not a fluke.
In fact, his recent prediction puts gold at $5,000 an ounce and higher in the next 12-18 months. A plausible target, although it remains a lofty one. Earlier this year, Christopher Wood put out a target of $4,200 per ounce. At the time, many people considered this to be unrealistic. Today, they are not so sure what to make of it.
Using Key Statistics
Making such a bold prediction is one thing, but backing it up is a different matter. Woods has used some interesting metrics in this regard. He refers to how the gold price was equal to 9.9% of US disposable income per capita at $850 an ounce. Projecting those ratios to the current gold price, the push to $5,000 makes a lot of sense.
The big question is whether the gold price – US disposable income per capita will increase again. It is not impossible, but most citizens have a lot more to be concerned about. After all, the COVID-19 pandemic is far from over. Moreover, the strain on personal finances will not relent, not even if a new stimulus package is ever approved.
Surprisingly, Christopher Wood is not the only one thinking along these lines. Several other analysts seem to agree with this price target, or even expect a higher value. Gold is, as always, a long-term investment first and foremost. Expecting it to triple in value over the coming months is unrealistic. That said, markets remain unpredictable first and foremost.