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It's been "a mad world" out there with record-high equities, real estate and more. But the long-awaited surge in gold and silver is coming in the next six months, said Mike Larson, senior analyst at Weiss Ratings.
"If you're in a world where many assets are over-valued, where real estate is extremely highly valued, stocks are extremely highly valued, and so on. What hasn't run up and remains relatively cheap? The biggest, most obvious answer to me is precious metals. And of course, the shares of the companies that mine them," Larson told Michelle Makori, editor-in-chief of Kitco News, on the sidelines of the New Orleans Investment Conference.
What's been holding gold and silver back this year is the fear that the Federal Reserve will have to act aggressively and raise interest rates quickly in order to fight off inflation.
But that is not going to happen, according to Larson. "There's going to be a realization in early 2022 that the Fed is not going to be able to be aggressive. People need to realize that this Fed is very tentative. It's a Fed that has a lot of political pressure to favor the employment side of its mandate over inflation."
This tightening cycle will be very different from the previous ones, and gold with silver are in the best position to benefit, Larson noted. "As we head into next year and get halfway through, we're going to see that next move up in gold and silver because people won't have to fear the Fed so much anymore. Especially if the GDP trends a little bit lower, what motivation do they have to hike rates aggressively?"
Larson's price outlook is quite bullish, projecting for both gold and silver to hit new record highs in the next six months.
"The highs that we saw 14 months ago in gold and silver will likely be eclipsed next year. It’s not going to be $4,000 gold, but $2,200, $2,300, $2,400. And a corresponding move in silver is likely on the table," he specified. "It's going to come from that release of that Fed fear that's been keeping people from getting involved."
Watch the video above to hear Larson's thoughts on the Fed losing its credibility as well as his reasoning behind why this is now a "mad world." Follow Michelle Makori on Twitter: @MichelleMakori.
By Kitco News
For Kitco News
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