Central Bank Buying Spree
Central banks, particularly those in emerging markets like China, India, and Turkey, have been aggressively accumulating gold to diversify away from the U.S. dollar.
Geopolitical tensions and sanctions risks (e.g., Russia’s exclusion from SWIFT) have accelerated this trend.
Trade Wars & Currency Depreciation
Rising U.S.-China trade tensions and potential tariffs could weaken the dollar and increase demand for gold as a hedge.
If the Federal Reserve cuts interest rates amid economic slowdowns, real yields could drop, making gold more attractive.
Inflation & Fiscal Deficits
Persistent inflation and soaring U.S. debt levels (now over $34 trillion) could erode confidence in fiat currencies.
Gold has historically performed well in high-inflation environments.
Technical & Investment Demand
Gold has already broken out to new all-time highs (~$2,400 in 2024), signaling strong bullish momentum.
Paulson believes that as more investors allocate to gold, a supply squeeze could push prices much higher.
Will Gold Really Hit $5,000?
While $5,000 seems extreme, gold has seen 10x rallies before (e.g., from $35 in 1971 to $850 by 1980). If central banks keep buying, the dollar weakens further, or a major financial crisis hits, such a move is plausible.
Would you consider increasing gold exposure in your portfolio?
