Economist Jim Rickards forecasts that gold prices could surpass $27,000, emphasizing that this projection is not made for attention or shock value. “It’s the result of rigorous analysis,” he clarified. This represents a significant increase from his previous estimate of $15,000 by 2026.
Jim Rickards’ $27K Gold Prediction Explained
Economist Jim Rickards shared his prediction for gold prices in an opinion piece published this week in the Daily Reckoning. Rickards is an American lawyer, economist, investment banker, and advisor on international economics and financial threats. He is also a best-selling author known for books such as “Currency Wars,” “The Death of Money,” and “The New Case for Gold.”
“I’ve previously said that gold could reach $15,000 by 2026,” Rickards began. “Today, I’m updating that forecast,” he wrote, elaborating:
My latest forecast is that gold may actually exceed $27,000. I don’t say that to get attention or to shock people. It’s not a guess; it’s the result of rigorous analysis.
“Of course, there’s no guarantee it’ll happen. But this forecast is based on the best available tools and models that have proved accurate in many other contexts,” the economist clarified.
Rickards’ analysis examines the non-deflationary price of gold under a new gold standard. Central bankers currently prefer fiat money, which they control, over gold, which they cannot. However, Rickards stated that they may have no choice “if confidence in command currencies collapses due to some combination of excessive money creation, competition from bitcoin, extreme levels of dollar debt, a new financial crisis, war or natural disaster.” In such cases, central banks might return to gold to restore global monetary stability. The analysis also considers the correct gold price to avoid inflation or deflation, citing historical examples for balance.
“The policy goal obviously is to get the price ‘just right’ by maintaining the proper equilibrium between gold and dollars. The U.S. is in an ideal position to do this by selling gold from U.S. Treasury reserves, about 8,100 metric tonnes (261.5 million troy ounces), or buying gold in the open market using freshly printed Fed money,” he detailed.
Rickards further explained that the U.S. M1 money supply is $17.9 trillion, which includes cash, bank reserves, and demand deposits. He added that assuming a 40% gold backing, a standard historically used from 1913 to 1946, $7.2 trillion in gold would be required. The economist continued:
Applying the $7.2 trillion valuation to 261.5 million troy ounces yields a gold price of $27,533 per ounce.
“That’s the implied non-deflationary equilibrium price of gold in a new global gold standard. Of course, money supplies fluctuate; lately they’ve been going up sharply, especially in the U.S.,” he noted. “There’s room for debate about whether a 40% backing ratio is too high or too low. Still, my assumptions are moderate based on monetary economics and history. A dollar price of gold of over $25,000 per ounce in a new gold standard is not a stretch.” As of May 17, the price of gold is $2,427.40 per ounce.