The Motley Fool

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

Image source: Getty Images.

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.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

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.  

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.