Why this expert is predicting gold to hit record high of US$2000

ASX gold stocks have been on a tear and the sector is likely to remain well supported as the price of the precious metal is forecasts to hit a record high of US$2,000 an ounce in the next 12-months.

| More on:

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

ASX gold stocks have been on a tear and the sector is likely to remain well supported as the price of the precious metal is forecasts to hit a record high of US$2,000 an ounce in the next 12-months.

The bullish prediction comes from Joe Foster who is the portfolio manager at VanEck – the world's largest gold exchange-traded fund, reported the Australian Financial Review.

The gold price couldn't muster enough momentum to reach that price barrier after the GFC when it peaked at a little over US$1,900 an ounce.

But Foster highlights four reasons why it can this time round.

Gold's 4 tailwinds

The first is the US$9 trillion ($14 trillion) in stimulus that central banks and governments around the world have pumped into the economy to soften the COVID-19 blow.

If the record amount of stimulus triggers an inflationary cycle or if the impact from the coronavirus is worse than expected, gold could even head north of US$2,000 an ounce, Foster told the AFR.

The second tailwind for gold is its ability to protect investors from any short-term deflationary shock that's triggered by the COVID-19 pandemic.

Works as an inflation and deflation hedge

Interestingly, gold is about the only asset that can also protect against inflation. If inflation does rear its ugly head due to the massive liquidity injection, the gold price will outperform.

Finally, ballooning sovereign debt from the stimulus is likely to devalue fiat currencies. This loss of faith in paper money is anther boon for the gold price.

The ASX gold stocks shining bright

For these reasons, Foster allocated around 20% of his portfolio to Australian gold miners. He commented that the drop in the Australian dollar rejuvenated the industry and prompted greater exploration activity.

The mid-tier ASX gold miners that he believes are great companies include Evolution Mining Ltd (ASX: EVN), Northern Star Resources Ltd (ASX: NST) and Saracen Mineral Holdings Limited (ASX: SAR).

However, he also likes earlier stage Australian miners. These include Gold Road Resources Ltd (ASX: GOR), West African Resources Ltd (ASX: WAF) and Bellevue Gold Ltd (ASX: BGL).   

Foolish takeaway

Foster's views follow my article on April 16 when I outlined reasons why the gold price will break new highs.   

The tailwinds supporting the commodity are unlikely to reverse or ease anytime soon. If anything, they can persist for the next few years.

This is why I have been recommending investors go overweight on the sector even as we recover from the coronavirus disaster.

While the yellow metal tends to outperform during a crisis, history shows that it keeps running well into the recovery phase.

Should you invest $1,000 in Clearvue Technologies Limited right now?

Before you buy Clearvue Technologies Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Clearvue Technologies Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Brendon Lau owns shares of Evolution Mining Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Resources Shares

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Resources Shares

Guess which ASX 200 mining stock is sinking 7% following its quarterly update

Let's see how this miner performed during the third quarter.

Read more »

Miner looking at a tablet.
Resources Shares

What's the latest broker ratings on BHP shares?

There's an air of caution floating about BHP shares even with bullish ratings.

Read more »

A young African mine worker is standing with a smile in front of a large haul dump truck wearing his personal protective wear.
Resources Shares

BHP shares last traded at $50 in 2023. When will they get back there?

Let’s dig into the potential for BHP shares to rise.

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX All Ords stock just rocketed 21% on 'exceptional' results

Investors are sending the ASX All Ords stock flying higher on Wednesday. But why?

Read more »

A mature age woman with a groovy short haircut and glasses, sits at her computer, pen in hand thinking about information she is seeing on the screen.
Resources Shares

Guess which prominent Super fund just offloaded its remaining Mineral Resources shares?

This super fund has had enough.

Read more »

Image from either construction, mining or the oil industry of a friendly worker.
Resources Shares

Broker names 10 ASX mining stocks set to outperform following Macquarie Conference

Twenty-two ASX mining companies presented at the annual Macquarie Conference last week.

Read more »

Miner holding cash which represents dividends.
Dividend Investing

Invested $8,000 in Fortescue shares 5 years ago? Guess how much passive income you've banked!

Fortescue is popular among passive income investors for paying two fully franked dividends per year, even during COVID.

Read more »

Miner looking at a tablet.
Resources Shares

BHP shares are up 9% in a month. Are they still good value?

Is Australia’s largest miner a big opportunity?

Read more »