Gold’s Shining Moment: From Portfolio Fuddy-Duddy to Must-Have

Core Viewpoint - There is a growing concern regarding the sustainability of debt levels among developed-market sovereign issuers, particularly the US, and the potential for a weaker dollar, leading to increased interest in gold as a core investment rather than a speculative asset [1][3][4]. Group 1: Gold Price Projections - Billionaire Jeffrey Gundlach projects that gold could rise from approximately $2,915 to $4,000 by March 2025, driven by technical momentum and concerns over sovereign credit [2]. - Gold futures recently surpassed $4,200 an ounce, marking a nearly 60% increase in price for the year [4]. - Bank of America has raised its gold price target, suggesting that the current rally may only be halfway through, with potential for gold to reach $6,000 by spring 2025 [8][9]. Group 2: Central Bank Behavior - Central banks are accumulating record amounts of gold, with global holdings reaching around 36,000 tonnes in 2024, reflecting a significant shift away from the dollar [12][13]. - For the first time since 1996, foreign central banks hold more gold than US Treasuries, indicating a growing lack of confidence in the dollar-dominated financial system [13]. - The trend of "de-dollarization" is gaining momentum, as nations seek alternatives to the US dollar amid geopolitical tensions and fiscal uncertainties [14][15]. Group 3: Changing Investor Demographics - Younger investors, particularly Gen Z and Millennials, are increasingly investing in gold, with over 60% of Millennials including it in their portfolios, compared to only 20% of Baby Boomers [17][18]. - The revival of gold as a relevant asset is also reflected in state policies, such as Texas recognizing gold and silver as legal tender, allowing for practical use in everyday transactions [19][20].