Central banks, particularly those in emerging economies, are ramping up their gold reserves in preparation for a new monetary regime, signaling a potential loss of reserve currency status for the U.S. dollar, according to the investment management firm Goehring & Rozencwajg. The company’s managing partner Leigh Goehring explained in a recent interview that gold will play a crucial role as a settlement mechanism.
Goehring & Rozencwajg Predicts Gold ‘Will Blow Through’ $2K Thanks to Central Bank Demand
On Wednesday, June 21, 2023, digital currency markets have risen by 6.98% over the last 24 hours, but precious metal markets have been lackluster. Gold is hovering just above the $1,930 range, while silver is coasting along under $23. Leigh Goehring, a partner from the investment management firm Goehring & Rozencwajg, believes gold could reach the $2,100 per unit range this year. Goehring shared his forecast with Kitco News, explaining that a new monetary regime is forming and gold will be an integral part of the new set of rules and monetary practices.
The executive of the investment firm explained that emerging economies are utilizing their central banks to amass a substantial stockpile of gold. He also observes that the U.S. dollar may forfeit its reserve status globally, with potentially massive repercussions. “The U.S. dollar might be on the verge of losing its reserve currency status,” the Goehring & Rozencwajg managing partner stated. “A change in the dollar’s reserve currency status would be the most impactful market shock of the last forty years.”
Goehring notes that central banks, particularly in emerging economies such as China, India, and Turkey, have been increasing their gold reserves. Central bank gold purchasing reached record-breaking levels at the end of the fourth quarter last year. The executive believes that assertive gold buying has the potential to propel the price above $2,000 per ounce and play a role in a shift in the monetary regime. In his interview with Kitco, Goehring adamantly maintained that his prediction will materialize. Goehring stated:
We will break through the triple top that we put in place at the $2,000 an ounce level. We will blow through it, and the central bank buying will be the big push.
A newly formed monetary regime change will likely happen this decade, Goehring stressed, and he wholeheartedly believes that gold and other valuable commodities will be used for settlement. “The monetary regime changes in 1930, 1968, and 1998 were hugely stimulative for commodity prices, and we believe the monetary regime change that will take place this decade will be no different,” Goehring explained.
Goehring’s view is not uncommon among investors who believe that gold is on the verge of a meteoric rise. Rick Rule, the founder of Rule Investment Media, is confident that gold will skyrocket in value in 2023, and the prominent investment bank UBS predicts that gold will reach an all-time high this year. Goehring suggested that if gold was chosen to be the ultimate settlement tool, within the new financial order, it could improve capital imbalances.
“Are we exploring this idea of trying to undermine the dollar reserve status and settle things in local currencies and be able to eventually take out capital imbalances through gold? It’s an interesting idea,” the investment management firm Goehring & Rozencwajg’s executive told the financial news publication.
What are your thoughts on the potential impact of central bank demand on gold’s trajectory? Share your thoughts and opinions about this subject in the comments section below.
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