Gold and Silver Poised for Record Highs, Strategist Predicts

Philippe Gijsels, chief strategist at BNP Paribas Fortis, anticipates gold prices reaching $4000 per ounce and silver hitting $50 per ounce within the next 3-6 months. This forecast is based on his view of a rapidly weakening US economy, which will force the Federal Reserve to take aggressive action.

US Economic Data Raises Alarms

This prediction comes on the heels of a report from the US Bureau of Labor Statistics (BLS) that revealed a record downward revision of 911,000 jobs in annual US job growth figures through March. "The labor market is clearly much weaker than most people thought," Gijsels comments, seeing this data as confirmation that the US economy is slowing significantly.

Furthermore, recent months have shown a slowdown in job creation, with June experiencing the first net decrease in jobs since 2020. These developments prompted JPMorgan Chase CEO Jamie Dimon to bluntly state, "The economy is softening."

Potential Federal Reserve Interventions

Gijsels believes that this slowdown will compel the Federal Reserve to take more drastic measures than simply cutting interest rates. He anticipates the central bank restarting quantitative easing (QE) or implementing yield curve control.

He emphasizes that these actions will drive the prices of physical assets significantly higher.

European Political Landscape and Debt Challenges

Concurrent with the economic uncertainty in the US, Europe is also facing political turmoil. The French government, the second-largest economy in the European Union, lost a vote of confidence due to disputes over debt management.

Gijsels suggests these events reflect a "Fourth Turning," a period characterized by institutional decay and governments' inability to address deficit problems. France is facing increasing challenges in controlling its debt, reportedly increasing at a rate of €5,000 per second.

Moreover, Fitch Ratings downgraded France's sovereign credit rating to A+, citing ongoing political instability and uncertainty surrounding its fiscal outlook.

Warning for Savers: Erosion of Purchasing Power

Gijsels warns that cash savers will lose approximately 50% of their purchasing power if inflation remains at 4% for 10 years. He stresses that we are witnessing a period of massive wealth transfer, where some will lose and others will gain.

Physical Asset Strategy: Gold and Silver Leading the Way

In these circumstances, Gijsels believes that precious metals, especially gold and silver, will experience significant gains. He points out that silver is undervalued and combines currency characteristics with industrial uses. He predicts that once silver surpasses $50 per ounce, it will "easily go to $100."

He adds that a shortage of silver supply could lead to significant increases exceeding two or three times, potentially reaching five or six times.

Merger and Acquisition Activity in the Mining Sector

Gijsels believes that the mining sector is just beginning to respond to these developments. He points to the merger of Anglo American and Teck Resources as evidence of the start of the merger and acquisition cycle he predicted a year ago. He emphasizes that major mining companies are making significant profits at current metal prices.