Interviews
'Extreme volatility' ahead for gold: Next 10 years to see 'never really imagined' price levels - Digix co-founder
(Kitco News) There is a lot of volatility ahead for gold, whether it be this year or this decade, with new investors embracing the precious metal in its traditional or digital forms, according to Digix co-founder and COO Shaun Djie.
Gold’s investor-base is already widening as many new type of traders have turned to gold during the COVID-19 outbreak.
More than two months after an all-across market sell-off, the yellow metal is outperforming many other asset classes while equities continue on their rollercoaster ride, Djie told Kitco News on Wednesday.
“My personal view on gold is very bullish. Prices have a lot more room to grow from here. Currently, we are seeing levels of $1,750, but gold can potentially climb closer to $1,800 or $1,900 even in the next quarter,” Djie said.
Gold is an anti-monetary policy asset, meaning that it will climb as central banks carry on with printing more money to help kick-start economies around the world after extensive global shutdowns related to the coronavirus.
“The Federal Reserve has been saying they will try all means to achieve recovery. We have seen from previous history episodes that all that means is printing as much cash as possible,” he said. “And gold is a natural tool against monetary policies implemented by central banks around the world.”
Gold’s future gains will attract a broader investor base, especially with many research firms and banks now pointing out to investors that gold is continuing to outperform.
“I won't be surprised to see people having more confidence to move towards gold as more central banks around the world print more cash to stimulate their economies,” Djie pointed out. “The whole world is under universal lockdown. Very likely that even when the economy reopens, there's going to a technical recession or even a general recession.”
Gold could test $2,000 by the end of this year, Djie added, noting that there are a lot more retail as well as high-end wealth individuals buying into gold.
“The stock market out there is increasingly more and more volatile. It's almost looking like a crypto market on some days, which is creating concern,” he noted.
Longer-term, Djie is looking at gold reaching $4,000 an ounce in the next ten years as the metal attracts more attention. “Gold is an anti-monetary policy asset class. It’s against the idea of printing cash out,” he said.
And considering how much money will be printed in the next decade, gold will end up standing out.
“In the next 10 years, gold will continue to be volatile. Gold would trade anywhere between the levels of $3,000 or $4,000 in the next ten years,” Djie stated. “We might actually see levels that we've never really imagined before given how much cash will be potentially put into the economy. The next ten years will be extremely volatile.”
The next decade also looks very promising for new technologies and new investment assets within the gold space, such as digital gold and digital gold tokens.
“The whole proliferation of digital currencies is growing quite a fair bit because of events like COVID-19. Difficult times like these force people to use technology in new ways, whether it is communication or purchasing food,” Djie added.
People cannot get face-to-face banking advice at the moment, they also can’t just go down to the pawn shop to sell or buy gold. This creates an opportunity for everything digital, Djie highlighted.
“The pros and cons of owning digital gold is technology itself. The pros are you can be buying precious metals around the world. It decentralizes idea of gold custody. It takes national policies, tax policies, and everything else out of the equation,” he explained.
Also, the field of digital gold will bring new blood into the market, including people who are not wealthy enough to buy one-ounce gold bars.
“The traditional way of buying gold could hinder some of the newer investors to come in. If you are buying a gold bullion bar, you can only buy a specific size. You cannot buy micro sizes. Whereas, the digital way of buying gold offers the ability for you to buy gold in grams and other micro sizes,” Djie said.
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