Gold has surged a little more than 170% over the past four years, rising from $1,800 per ounce to nearly $5,000 per ounce, in what has been among the metal’s most historic bull runs.
But about as notable as the actual rise itself are the continued expressions of optimism in the outlook for gold, particularly from some of the most credible analysts in the game. This seemingly unbridled confidence in gold’s future speaks volumes about the degree of faith that analysts have in the continued health of the underlying drivers responsible for pushing the metal ever higher.
And in what is perhaps the boldest expression of that confidence, Bank of America (BofA) has announced it has raised its near-term price target for gold to $6,000 per ounce.
Referring to key historical performance records notched by gold in its last several bull runs, Michael Hartnett, recently told clients:
“History no guide to future, but avg gold jump past 4 bull markets ≈ 300% in 43 months which would imply gold reaching $6,000 by spring.”
If he’s right, that means gold will rise another 20% or so in just the next few months.
BofA Analyst: “Gold Continues to Stand Out as a Hedge and Alpha Source”
Hartnett’s especially robust outlook comes on the heels of another gold-favorable declaration made by a respected BofA analyst. Michael Widmer, head of metals research at the institution, noted in a January 5 report that “gold continues to stand out as a hedge and alpha source,” adding:
“Whichever portfolio you’re looking at, whether it’s a central bank portfolio or an institutional portfolio, they can benefit from diversification into gold.”
Indeed, one of the reasons Bank of America continues to expect so much from gold is because of how underweight the metal remains as a portfolio component among high-net-worth investors. Widmer detailed this fact in a December webinar, pointing out that the best-heeled investors currently have just a 0.5% allocation to gold. He clarified that while traders and speculators have helped to create a situation where “the gold market has been very overbought…it’s actually still underinvested.”
The bottom line, suggested Widmer, is that “there’s still a lot of room for gold as a diversification tool in portfolios.”
And a lot of room for the gold bull to keep running, apparently.
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