24 Feb 2022
By David Lin, kitco.com:
Tensions continue to rise in Eastern Europe as Russian President Vladimir Putin vowed a “strong response” to the West if sanctions continue.
Frank Holmes, CEO of U.S. global investors said that gold has historically performed well during political crises and sees the price climbing as much as 50% higher from current levels.
“It’s a non-event for gold to go up or down 20% in a year,” Holmes told David Lin, anchor for Kitco News. “Two years ago it went up two standard deviations for the first nine months, so it were to do that again, then it could go to $2,800. That would be up two standard deviations, and that wouldn’t be extraordinary. Three standard deviations over twelve months is. I think [gold] is undervalued. I think it’s probably worth about over $4,000 if you use money printing number data, then you’re talking $7,000 or more. I feel comfortable that gold can easily run to $2,500 or $3,000.”
Bitcoin, on the other hand, has not reacted as positively to rising geopolitical tensions in Ukraine.
“I think when you look at gold, its breath and depth, historical significance as a wonderful asset, is really showing up when you have war. Bitcoin is a new phenomenon. It’s over a decade old. It’s new, and its ecosystem around the world is new. Yes, it’s widely embraced by generations X, Y, and Z and millennials, in particular, but gold has a phenomenal historical significance that whenever there’s big inflation or there’s political turmoil, that gold is the asset class of choice,” he said.
Wars and geopolitical tensions have, in the past, provided tailwinds for gold, and Bitcoin still needs to overcome its regulatory challenges before it takes off, Holmes said.
“Historically, it’s been gold, so I would stick with that. I think once we get more rules and regulations come into the ecosystem, then Bitcoin will take on its next leg,” he said.
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