This is the gold price should hyperinflation kick in - VanEck's Joe Foster

(Kitco News) - Inflation could run above the Federal Reserve’s 2% target by as early as April, said Joe Foster, portfolio manager of the VanEck International Investors Gold Fund, and a highly inflationary environment will be the main catalyst behind gold price breaching its previous all-time highs to reach above $3,000 an ounce.

Foster said that gold’s target price over the next two to three years is $3,400.

“We see the same drivers driving gold in the near term and the long term, and we think we’re in another one of these secular bull markets for gold that’s going to take it much higher,” he said.

Importantly, inflation will rise fast, very soon, Foster said.

“We think inflation is going to perk up around March or April and that’s just based on a year on year comparison, when the pandemic hit, the economy collapsed, so when you look at the year on year comparison, we’re probably going to see inflation trend over 2% starting around March or April, and that will carry it for a few months,” he said.

Over the long term, a rise in prices this year could morph into more permanent inflationary environment that could cause problems, with even a “hyperinflation” scenario not impossible.

Despite an economic recovery eventually setting in, gold’s trajectory upwards would be unhindered, owing to the vast increase of money supply already being created by monetary stimulus in 2020, Foster said.

By David Lin

For Kitco News

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dlin@kitco.com

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