'The Fed Can't Print Gold,' Bank of America Says

Bank of America’s analysts also make the case for three senior gold miners.

Bank of America’s strategists see gold hitting $1,800 an ounce in 18 months.

Gold’s not having a good day—but that hasn’t stopped Bank of America for upping its target on the precious metal to $3000.

Everyone has their reason for liking gold. Some like gold as an inflation hedge. Others like it as protection against increased uncertainty. Still others want to own it in case they have to flee their home country in the middle of the night, even if that seems a bit extreme. And right now people want to own gold.

Gold’s recent run began back at the end of September 2018, when the precious metal was trading at $1,465.70. Since then, it’s gained 15% to $1,689.60 And if Bank of America’s Michael Widmer and team are right, the precious metal is heading a lot higher. Like 78% higher, to $3,000. The reason? “The Fed can’t print gold.”

Widmer expects rates to be low in the U.S. and the rest of the world for a very long time as central banks try to boost GDP growth and inflation. They’ll also be increasing the size of their balance sheets, while government deficits balloon. “Another important point to remember is that, just as central banks are socializing risk in financial markets, governments are increasing their spending like never before during peacetime,” he writes. “Investment demand has correlated strongly with gold prices in recent years, and we expect precisely this group of buyers to drive gold prices higher.”

Is it going to be a straight line? Absolutely not. Gold will have to wrestle with a strong U.S. dollar and reduced demand from places like India and China. That shouldn’t stop gold from hitting $3,000 fin 18 months, Widmer writes.

Higher gold prices are, of course, good news for gold miners. We saw just how good today, when Newmont Goldcorp (NEM) raised its dividend by 79%. Bank of America’s gold equity analysts dub Newmont its top”senior gold producer pick,” and also has Buy ratings on Agnico Eagle Mines (AEM) and Barrick Gold (GOLD).

And lower gold prices can’t hurt the stocks too much on Tuesday. Shares Newmont were off 0.5% at $59.26 at 2:48 p.m. Tuesday, Barrick was unchanged at $24.92, and Agnico Eagle stock had risen 0.6% to $54.19, even as the SPDR Gold ETF (GLD) had dropped 1% to $158.07.

Write to Ben Levisohn at

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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