Economist Jim Rickards forecasts that gold prices could surpass $27,000, emphasizing that this projection is not made for attention or shock value. “It’s the result of rigorous analysis,” he clarified. This represents a significant increase from his previous estimate of $15,000 by 2026.
Jim Rickards’ $27K Gold Prediction Explained
In an opinion piece published in the Daily Reckoning, economist Jim Rickards shared his prediction for gold prices. Rickards, an American lawyer, economist, investment banker, and advisor on international economics and financial threats, is also a best-selling author known for books such as “Currency Wars,” “The Death of Money,” and “The New Case for Gold.”
“I’ve previously said that gold could reach $15,000 by 2026,” Rickards began. “Today, I’m updating that forecast,” he wrote, elaborating:
My latest forecast is that gold may actually exceed $27,000. I don’t say that to get attention or to shock people. It’s not a guess; it’s the result of rigorous analysis.
Rickards emphasized there is no guarantee it will happen, but the forecast is based on the best available tools and models that have proved accurate in many other contexts.
His analysis examines the non-deflationary price of gold under a new gold standard. Currently, central bankers prefer fiat money, which they control, over gold, which they cannot. However, Rickards suggested that if confidence in command currencies collapses due to excessive money creation, competition from bitcoin, extreme levels of dollar debt, a new financial crisis, war, or natural disaster, central banks might return to gold to restore global monetary stability. The analysis also considers the correct gold price to avoid inflation or deflation, citing historical examples for balance.
The policy goal obviously is to get the price ‘just right’ by maintaining the proper equilibrium between gold and dollars. The U.S. is in an ideal position to do this by selling gold from U.S. Treasury reserves, about 8,100 metric tonnes (261.5 million troy ounces), or buying gold in the open market using freshly printed Fed money.
Rickards further explained that the U.S. M1 money supply is $17.9 trillion, which includes cash, bank reserves, and demand deposits. Assuming a 40% gold backing, a standard historically used from 1913 to 1946, $7.2 trillion in gold would be required. The economist continued:
Applying the $7.2 trillion valuation to 261.5 million troy ounces yields a gold price of $27,533 per ounce.
He noted that this is the implied non-deflationary equilibrium price of gold in a new global gold standard. Money supplies fluctuate, especially in the U.S., and there is room for debate about whether a 40% backing ratio is too high or too low. Still, Rickards considers his assumptions moderate based on monetary economics and history. A dollar price of gold over $25,000 per ounce in a new gold standard is not a stretch. As of May 17, the price of gold is $2,427.40 per ounce.
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