Analysts predict $5,000 gold price! Here’s how I’d invest

Yes, a $5,000 gold price is possible. Here’s how Anna Sokolidou would invest to take advantage of an imminent rally.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

A $5,000 gold price isn’t unrealistic, many experts think. Indeed, it’s possible. The global economy is struggling. And there’s plenty of political uncertainty, too. Here’s how I’d invest now to take advantage of the gold rally that is likely ahead. 

Why will gold prices surge?

Well, to start with, the macroeconomic recovery is quite slow. We all know the coronavirus pandemic was a great blow to the world’s economy. So, central banks, including the Bank of England and the US Federal Reserve, aren’t going to change their monetary policies any time soon. This means central banks will keep their interest rates near zero. They’ll also keep flooding the financial system with cash. That alone is bullish for gold prices since investors will seek to invest the cheap cash. But at the same time many companies’ profits will stay low for a while. When the economy isn’t doing well, many companies are struggling due to the lack of demand for their products or services. This will make many investors favour safe haven assets, including gold, I think. But this scenario is rather too optimistic, in my opinion.

There’re plenty of other factors to consider. First, investors all over the world should be worried about so much uncertainty around Brexit. It’s still unclear whether it’ll be a ‘deal’ or a ‘no-deal’ one. But the US situation is even more likely to fuel the gold price rally. Just think of the US-China trade tensions and the US elections. Any worrying news from these fronts will make investors rush to safe havens, I think. But how far can the gold prices rise? Well, Alissa Corcoran, Director of Research at Kopernik Global Investors, thinks gold could reach $5,000. She isn’t alone here. Billionaire Thomas Kaplan, head of asset management firm Electrum Group, also gave the price target of $5,000. I am not personally sure how far the gold prices can rise. But I’m highly bullish on the precious metal.    

Here’s how I’d invest

Buying gold at every pullback might seem like a very smart move. But buying the shiny yellow metal has plenty of drawbacks too. First of all, the storage and insurance costs might be high. Secondly, physical gold doesn’t pay any interest or dividends. 

But there’s a sound way to take advantage of the $5,000 gold price. I think it’s a good idea to buy gold miners’ shares. It’s prudent for UK investors to buy companies listed on the LSE to avoid currency fluctuations. My colleague Rupert wrote a wonderful article about Eurasia Mining. But I can assure you there’re many more companies available for investing. Here’re my criteria for choosing such companies. To start with, they shouldn’t be small or mid caps. They should be among the largest companies. Then, they should have long operational histories. Needless to say they should be profitable and have high credit ratings. Last but not least, they should also pay dividends. You might like to reinvest these dividends to buy more of your favourite companies’ shares. Here at The Motley Fool we offer numerous catalogues that can help you choose the best-in-class mining companies’ shares.  

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Anna Sokolidou has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Surely, the Rolls-Royce share price can’t go any higher in 2025?

The Rolls-Royce share price was the best performer on the FTSE 100 in 2023 and so far in 2024. Dr…

Read more »

A young woman sitting on a couch looking at a book in a quiet library space.
Investing Articles

Here’s how an investor could start buying shares with £100 in January

Our writer explains some of the things he thinks investors on a limited budget should consider before they start buying…

Read more »

Investing Articles

Forget FTSE 100 airlines! I think shares in this company offer better value to consider

Stephen Wright thinks value investors looking for shares to buy should include aircraft leasing company Aercap. But is now the…

Read more »

Investing Articles

Are Rolls-Royce shares undervalued heading into 2025?

As the new year approaches, Rolls-Royce shares are the top holding of a US fund recommended by Warren Buffett. But…

Read more »

Investing Articles

£20k in a high-interest savings account? It could be earning more passive income in stocks

Millions of us want a passive income, but a high-interest savings account might not be the best way to do…

Read more »

Investing Articles

3 tried and tested ways to earn passive income in 2025

Our writer examines the latest market trends and economic forecasts to uncover three great ways to earn passive income in…

Read more »

Investing Articles

Here’s what £10k invested in the FTSE 100 at the start of 2024 would be worth today

Last week's dip gives the wrong impression of the FTSE 100, which has had a pretty solid year once dividends…

Read more »

Investing Articles

UK REITs: a once-in-a-decade passive income opportunity?

As dividend yields hit 10-year highs, Stephen Wright thinks real estate investment trusts could be a great place to consider…

Read more »