"We think that gold has entered into a new phase of this bull market," said Adam Rozencwajg of Goehring & Rozencwajg (G&R).
G&R has been bullish on gold for quite some time, but we have been mostly out of the market for the last couple of years. Now we see signs that it's time to get back in.
Speaking to the Investing News Network, Adam Rozencwajg, Managing Partner at G&R, mentioned that in 2020 two factors prompted G&R to take a step back from gold. The first was that the gold-oil ratio was favoring energy, and the second was that silver had caught up to gold.
"We got those two signals at the same time," Adam noted. "We had this idea that silver staged this catch-up rally, which in the past has been a sign that you're going to take a bit of a breather, and you had the fact that on a relative valuation basis, the gold-oil ratio was so favorably skewed towards energy — we've never had a reading like that in which oil did not massively outperform gold."
"We think that gold has entered into a new phase of this bull market," Rozencwajg said. "It probably started in the third and fourth quarter of last year, and it really revolves around central banks' behavior as much as anything else. I think it's going to propel gold much much higher in this leg of the bull market."
Goehring & Rozencwajg's price target for gold has five figures, although Rozencwajg didn't share an exact timeline.
"I would guess it's in the US $12,000 to US $15,000 an ounce range," Adam said. "That might sound shocking — maybe it doesn't, it depends who your listeners are — but that number's not made up, it comes from a few different factors."
Those factors include the relationship between how much gold the government holds and the amount of dollars in circulation, which Rozencwajg described as an implied gold backing. Looking at the price of gold relative to other financial assets is another way to get there. "That's always kind of been our long-term price forecast on gold," he said.
Watch the Investing News Network interview below for more from Adam Rozencwajg on gold's path forward. (The interview was filmed on June 6, 2023).
Want to read more research from Goehring & Rozencwajg? We invite you to download or revisit our entire Q1 2023 research letter, available below.
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