Brent Johnson, CEO of Santiago Capital, joins Real Vision to discuss his expectations for the price of gold and the dollar. He details the subtle balancing act investors must employ to get the timing right on gold. This clip is excerpted from a piece published on Real Vision on June 6, 2018.
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Early or Wrong on Gold? (w/ Brent Johnson) | Gold
For the full transcript: https://rvtv.io/2D71zGK
So, of course, as always, I have a lot to say about gold. You know, I think the first thing I want to get across is that my thesis on gold has not changed. Everybody should own gold. It should be part of everybody's portfolio. And you know, I've said for a long time that gold is going to go to at least $5,000. That hasn't changed. Gold is going to go to $5,000. And the reality is, it's probably going to go a lot higher than that. But so-- for anybody that's trying to put me-- you know, peg me down as far as time and price, I'll say $5,000. Now, I don't know if I'm going to necessarily tell you exactly when. But I still think gold goes to at least $5,000. The only question is when. But part of the other thing is that-- part of the reason that gold will go that high is because it will be at least part of the solution when this, you know, horrible system that the central banks have created eventually comes down. You know, this dollar milkshake theory is not one in which the dollar remains the world reserve currency. I think we're going to get to a place where the dollar gets so strong they're going to have to come to some new kind of Plaza Accord or some kind of a system where they dramatically reduce the dollar. But it's not going to be where-- where we-- that we reduce the dollar and people are mad at us. I think the world's going to beg us to reduce the value of the dollar. Because you know, the strong dollar, quite honestly, it just breaks the entire monetary system. It breaks international markets. It breaks emerging markets. And it actually is, in the long term, not great for the US markets either. But it doesn't mean it's going to happen right now. So I think over the next couple of years, the dollar goes much, much stronger. I think initially, that breakout is going to surprise a lot of people. I think it's going to create a lot of chaos. And it will ultimately be that chaos that makes gold go a lot higher. I tell people all the time that a lot of the typical gold theory is that the dollar gets inflated away and gold goes through the world-- goes through the roof. And there is that view. But there is nothing that is more long-term bullish for gold than a strong dollar. Before we get into that, let's talk about a little bit why gold, quote-unquote, "hasn't worked" for the last several years. Well, the reality is is I think gold has worked for the last several years. Many of us in the gold world got it wrong as far as timing when it would work in US dollar terms. But if you're not a US dollar investor, you know, and you lived in Cyprus, or Russia, or Argentina, or Venezuela, gold worked just fine. Gold did what it has always done for 5,000 years. It's provided a safe haven when things got bad.
And the reality is is that things did not get worse here in the United States over the last five or six years. And as a result, gold has not performed as it has in those other currency terms. But it doesn't mean that gold isn't working.