(Kitco News) - Gold’s fresh rally to all-time highs above $3,800 continues to prove that this bull run has no equal in recent history and that the precious metal itself has become a force of nature, according to one market strategist.
In an interview with Kitco News, Robert Gottlieb, an independent precious metals industry expert and former Managing Director of the precious metals desks at JPMorgan and HSBC, said that he isn’t attempting to guess how high gold might go, even as many banks and analysts have set a target at $4,000 an ounce. However, he added that he does see this rally lasting for at least three years, as long as President Donald Trump’s policies dominate the U.S. economy.
Gottlieb added that he does not want to debate whether Trump’s policies are good or bad, but he said there are signs they are creating geopolitical and economic uncertainty, which in turn is fueling demand for gold.
“ Gold's status has structurally changed,” he said. “ Gold has always been a safe-haven asset, but I believe that gold has now become the ultimate safe-haven asset, which is a slight, but very important, difference,” he said.
Gottlieb added that this trend started in 2022 when the U.S. government, under President Joe Biden, weaponized the U.S. dollar against Russia for its invasion of Ukraine.
However, the diversification trend has intensified in the last few months under Trump as nations, including important allies, navigate rising volatility surging through financial markets due to the global trade war and elevated import tariffs. He added that the world has become a lot more fractured as deglobalization trends intensify.
“Gold is a completely different asset because of the global geopolitical and economic uncertainty around the world,” he said. “Countries are starting to tell themselves: ‘Hey, we need to diversify away from the dollar.’ And they're diversifying away from the dollar because of the end of globalization. They are diversifying into gold because it is not a fiat currency and it's not the credit and faith of any specific country.”
Along with general economic uncertainty, there is also a growing lack of faith in the U.S. dollar and U.S. Treasuries as the White House tries to put political pressure on the Federal Reserve to aggressively lower interest rates.
Gottlieb told Kitco that in this environment, central banks will continue to buy gold even at elevated and record-high prices. He noted that in this unprecedented rally, gold has surpassed the euro to become the second-largest asset held by central banks. Some analysts have also noted that gold has surpassed U.S. Treasuries held in official reserves.
“ The euro is the third biggest holding among ECB central banks. If that doesn't scream ‘buy gold,’ then nothing does,” he said.
In his 30-year career, Gottlieb has worked with many central banks, helping them build their gold reserves.
Gottlieb’s insights come as he prepares to launch a book: “Mastering Gold and Silver Markets: Insights from a Legendary Bullion Bank Trader,” which is available for preorder on Amazon.
“The first thing you have to understand about central banks is that they have very deep pockets,” he said. “ In all the years that I worked with central banks, the one thing I learned is that the price never matters,” he said.
Gottlieb added that central banks will be strategic in their purchase programs, trying to buy on dips or perhaps slowing purchases at higher prices, but they will ultimately continue to buy until they have achieved their targets.
So far, emerging market central banks have been the most active participants in gold, but Gottlieb said he thinks it’s only a matter of time before developed economy central banks start to buy. He added that, along with price, time is also irrelevant for central banks.
“One central bank told me it may take 10 years for a decision on gold to be made,” he said.
Meanwhile, Gottlieb said that China could be an important catalyst to drive developed market central banks into the marketplace.
China has played a dominant role in gold for the last three years, but its reserves now only represent about 7% of total foreign reserves. Some analysts have speculated that China would need to increase its reserves to 20%, which would create the largest gold holdings in the world, second only to the U.S.
Gottlieb said it is clear China wants to be Asia’s gold hub – competing with London and New York markets – as it looks to use the Shanghai Gold Exchange to entice central banks to hold their gold with them.
This year, China also launched a pilot project that allowed its top insurance companies to invest up to 1% of their assets in gold.
And this summer, the Chinese government opened its first offshore gold vault in Hong Kong.
“China represents the biggest source of demand and supply of gold in the world, and clearly they want to become an international player,” said Gottlieb.
However, Gottlieb added that the biggest hurdle China faces is its capital controls on its economy and currency.
“China is a dominant player, but there is always the fear that they could change the rules overnight. I’m a little leery on what China is doing, and if they succeed,” he said.
With this broad picture in view, Gottlieb said it is not surprising that investors are now jumping into gold even at higher prices. He added that knowing central bank demand will remain strong for potentially the next 10 years is providing some value and security in the marketplace.
“Retail investment is just getting started, and I don’t think it is going to end as it remains an important diversification tool,” he said. “With all this economic uncertainty, you can’t ignore the need for an insurance policy.”
