To The Moon

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The recent strong performance of gold $Gold - main 2312(GCmain)$ prices, which have broken through the key resistance level of $1,950 an ounce, has attracted the attention of a growing number of precious metals and alternative asset investors.

In fact, with inflation continuing to run rampant, many investors are looking for a store of value that won't depreciate, including Peter Schiff, CEO of Euro Pacific Capital, an investor who has always had confidence in precious metals.

In his view, the Fed is unlikely to continue tightening policy and will eventually expand quantitative easing (QE). The U.S. economy has been relying on quantitative easing and is falling back into recession, basically obliterates all the efforts already made by the Fed.

Schiff has been bullish on gold

Schiff believes the Fed is bound to step up easing because the current program can't avoid a hard landing and the economy is already weaker than widely believed, which could lead to a sharp rally in gold as investors realize the economy isn't improving as much as expected, which runs counter to the goals of the Fed's hawkish monetary policy stance.

He pointed out that the current market sell-off was not driven by new triggers, but by speculative trading activity, with some investors actually switching from long positions to short positions.

According to Schiff, the principles behind gold trading are flawed. Because of rising inflation, the price of gold is lower than the cost of production. He predicted that mining companies would not invest more until the price of gold reached $2,500 - $3,000 an ounce, leading to a supply shortage that would push prices towards that level.

Take oil as an example, he said mining is an energy-intensive industry. A decade ago, oil prices were $12 to $15 a barrel, now they are around $90. In addition, labor costs are rising due to the increased cost of living in gold-mining countries. With the exception of a few highly efficient gold producers, the current gold price does not really cover the full cost of mining for many gold producers.

Therefore, these inflationary pressures should be expected to put some natural upward pressure on gold prices over time. Those miners who cannot improve their efficiency will go out of business, leading to supply shortages and higher gold prices.

Schiff disagrees with the market's view of the economy and he believes the U.S. economy is headed for a recession. He noted that gold prices could continue to move higher as investors seek safe haven assets.

Despite the current market pessimism about precious metals as a store of value, gold buying will surge as fear returns to the market. He noted a major shift in sentiment, with gold fundamentals strong but bullish sentiment drifting.

Will Schiff's view on gold come true?

While Schiff boldly forecasts gold to hit $5000 a troy ounce, some analysts point out that gold has been trending down for the past year or two and could continue to fall unless there is a major catalyst. In the current environment, returns on other assets such as stocks or real estate are more attractive.

Ultimately, only time will tell if gold can hit $5,000. However, one thing is certain: investors will be paying close attention to gold prices and the Federal Reserve's monetary policy when making investment decisions. Whether the $5,000 gold price is a dream or a wise prophet, we will wait and see.

If you're interested in investing in precious metals, take a look at this company: $Golden Tag Resources Ltd.(GTAGF)$. Golden Tag, a Toronto-based mineral exploration company, has acquired the La Parrilla complex in the Mexican state of Durango.

The La Parrilla complex is a fully licensed complex consisting of five underground silver-zinc-lead mines, an open pit mine and a processing plant with a capacity of 2,000 tonnes per day. The company also holds a 100% interest in the San Diego Project located in the state of Durango, Mexico.

The San Diego project, Mexico's largest undeveloped silver asset, is located in the prolific Velardena mining area. The Velardena mine contains several mines that produce silver, zinc, lead and gold, with a production history of more than 100 years.