Gold Set to Hit $4,000 as Gundlach Predicts 60% Recession Risk
The comments below are an edited and abridged synopsis of an article by Steve Goldstein, MarketWatch
Jeffrey Gundlach, widely recognized as the “bond king,” has long been a proponent of gold, and his bullish outlook on the precious metal continues to gain traction. In a recent investor call, Gundlach, the Chief Executive and Chief Investment Officer of DoubleLine Capital, expressed confidence that gold could reach $4,000 per ounce, a milestone many would have considered unimaginable just a few years ago.
Gundlach’s prediction comes after gold’s impressive rise, recently surpassing the $3,000 per ounce mark. “Gold continues its bull market that we’ve been talking about for a couple of years now, ever since gold was down to $1,800,” Gundlach stated. He emphasized that the steady upward movement of gold over time has set the stage for this further price surge. Although he was uncertain whether $4,000 will be reached in 2024, he highlighted that gold’s price action is following the “measured move” expected after the prolonged period of consolidation around the $1,800 range.
A key factor driving this price increase is the significant surge in central-bank purchases of gold. Gundlach noted that this upward trajectory of gold buying is unlikely to stop anytime soon. He believes that central banks are turning to gold as a reliable store of value, especially given the instability of the financial system and the uncertain economic environment.
Moreover, Gundlach’s outlook on the broader financial landscape also reflects his confidence in gold. He pointed to the underperformance of US stocks compared to European equities, particularly as the US dollar enters a downtrend. Gundlach and his team at DoubleLine began investing in Europe around 2021, a strategy that has now gained momentum after a challenging couple of years.
Regarding the US economy, Gundlach assigned a 60% probability of a recession in 2024. This forecast is considerably higher than those of many Wall Street banks, which generally anticipate steady economic growth. Gundlach cited volatility in the bond market, where expectations for Federal Reserve rate cuts have been fluctuating rapidly, a sign of deeper underlying economic risks. According to Gundlach, this uncertainty only adds to the appeal of gold, which has historically acted as a safe haven during times of economic turmoil.
With all these factors in mind, Gundlach’s long-term outlook on gold remains bullish. He predicts that gold will continue to be an essential asset in any investment portfolio, especially as central banks, institutional investors, and individual buyers seek stability in the face of an unpredictable economic future. For investors looking to navigate these turbulent times, Gundlach’s forecast serves as a reminder that gold’s role as a store of value is more important than ever.
In conclusion, Gundlach’s bold prediction that gold could eventually reach $4,000 per ounce aligns with the growing trend of central banks accumulating gold and the increasing interest in diversifying portfolios amid economic uncertainty. As gold continues to rise, investors may be well advised to keep a close eye on this precious metal in the coming years.
