By Sean Kelly
Nobody needs reminding the 2020 was a year for the record books. On the financial front, the US government blew the lid off of the national debt. From $23.2 trillion at the end of 2010, the red ink spurted up to $27.5 trillion to finish 2020. That’s an increase of $4.3 trillion in a single year. And that is before the new $908 billion pork-laden stimulus bill and the omnibus $1.4 trillion spending bill to fund the government through September land somewhere on the fiscal ledger.
As we say, one for the record books.
When government are fiscally and monetarily reckless, the importance of gold and silver as safe havens and profit opportunities come into sharp focus. Accordingly, as the US and other countries spent and printed throughout 2020, gold rose to new all-time highs around the world.
More of the same is in store in the New Year. As we commented in October, even before any of the forthcoming Biden-Harris spending initiatives took shape, “We think gold will rise dramatically if Biden is elected. That is because the debt that has been run up has already been run up. The money that has been printed has already been printed.”
“It is all a fait accompli.”
Herewith are a variety of informed views and predictions for gold and silver prices in 2021. Some of these we have published before, others we are presenting here for the first time.
Citing Janet Yellen at Treasury and “currency debasement concerns,” analysts at TD Securities are calling for gold to reach $2100 over the next 12 months.
A report from Bank of America (with the pithy title “The Fed Can’t Print Gold!”) raised its target for gold prices to $3,000.
Citi analysts now have a call for $2,500 gold in 2021, with another possible target of $2,700.
Credit Suisse, the Swiss-based investment bank writes, “Big picture, we continue to look for $2300.” Its strategists conclude that the sell-off in gold prices since the August high is “a temporary and corrective pause in the broader uptrend.”
Taking a longer view, Bloomberg Intelligence Senior Commodities Analyst Mike McGlone tweeted “Gold Set for $7,000 in 2025 If Trends Stay Friendly Like 2001-11. ”
Analysts at Commerzbank, Germany’s second largest bank, have published a report calling for silver to continue outperforming gold. “The arguments for a further increase in the silver price are, in our opinion, overwhelming. The flood of cheap money is likely to lift not only gold but also silver.” They expect silver to rise to $32 an ounce in 2021. ”
Mike McGlone, the Bloomberg analyst whose gold outlook we referred to earlier, says the technical picture for silver points to $50 an ounce. He cites both energy applications and quantitative easing for as support for that outlook.
Citibank analysts, who correctly called for gold to breach $2,000 in 2020, write they expect “that investor demand for precious metals exposure will remain high during 2021.” Analysts list currency devaluation and rising debt as among the responsible factors. Citi calls $50 silver a “very realistic target,” and $100 an ounce “possible.”
Acknowledging that investment demand remains in the driver’s seat for silver, Goldman Sachs has reiterated its call for $30 silver due to growing demand from the energy sector. Its analysts say global solar installations will increase by 50% between 2019 and 2023 as the greenification trend accelerates.
And finally, because the potential for real principal loss in the value of the dollar has never been more real, we want to share once again a warning from Stephen Roach. Roach is a former Fed official, one-time chairman of Morgan Stanley Asia, and now an economist at Yale. His 2005 warnings about the bursting of the housing bubble were spot on.
Loose money and out of control deficits have consequences, so Roach is now calling for a 35 percent dollar crash. He warns that “US living standards are about to be squeezed as never before.”
“The national savings rate is probably going to go deeper into negative territory than it has ever done for the United States or any leading economy in economic history,” said Roach.
We agree with Roach that the debt bubble is a cataclysmic threat to our standard of living and American economic resilience. Its popping has the potential of driving precious metals prices to levels that are largely unforeseeable and will render most of the forecasts here inadequate. It will be the biggest economic event of our lifetimes, and while we will all suffer its effects in one way or another, those who own gold and silver will be protected from some of its worst consequences.