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Gold's 5-year target can still be $5,000 as markets underestimate central banks' tightening risks – Quadriga Igneo fund

Kitco News

(Kitco News) Gold is still capable of rising to $3,000-$5,000 an ounce in the next three to five years as markets underestimate the longer-term risks associated with the central bank monetary policy tightening after massive money printing, according to Quadriga Igneo fund.

This forecast comes from the fund's manager Diego Parrilla, who successfully predicted gold's record-high rise to $2,075.47 last year.

"Central bank money printing isn't really solving problems, it's delaying the problem," Parrilla told Bloomberg. "Gold will benefit purely from being a physical asset that you cannot print."

Money printing and ultra-loose monetary policies around the world have created a lot of longer-term problems, including asset bubbles, said Parrilla. And central banks have a tough job ahead of them when it comes to tapering and raising rates in this environment.

"The tapering process will be glacial in terms of speed," said Parrilla. "I think the drivers for gold strength, not only remain but actually have been strengthened."

Since the new record highs were seen almost a year ago, gold has been consolidating and trying to move back towards $1,900 on a sustainable basis. About a month ago, the precious metal suffered a setback when the Federal Reserve hinted at the tapering talk. At the time of writing, December Comex gold was last trading at $1,821.60, up 0.24% on the day.

Parrilla also noted that gold could start rising following a risk-off event that would show central banks as not in control of the economic situation.

The $250 million Quadriga Igneo fund has been seeing some losses in the first half of the year, down 22% in the first six months. Bloomberg pointed to the fund's long position on gold and insurance and short position on equities as the reason for the underperformance.

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