New gold playbook in effect, says Stoeferle

The gold price is on track to reach US$4800/oz in 2030 as it has decoupled from its inverse correlation with US real yields and exchange-traded fund (ETF) flows, Ronald-Peter Stoeferle, managing partner at Incrementum, told Mining Journal at the 2024 Precious Metals Summit in Beaver Creek in Colorado, US.

Stoeferle, who edits the increasingly influential annual In Gold We Trust report, said central banks and emerging markets are now in the driver's seat regarding gold, while Western financial investors are still on the sidelines.

"In this year's report, we described the new gold playbook, this enormous amount of physical demand coming from emerging markets, especially China, India and the Middle East, but then also from central banks in the first half of this year, which at 480t, was an all time," Stoeferle said.

Stoeferle added that after the global financial crisis in 2008, the gold price crossed the $1000/oz psychological barrier and then doubled within two years, and a similar situation is playing out now.

"We have been flirting with this $2000/oz level for almost four years, and we have had this impulsive breakout from that big consolidation pattern, this handle of a big cup and handle pattern, so it could be similar in that we are going to double over the next three to four years," he said.

"The interplay between the gold price and real interest is not working as it has in the past. In the old playbook, with real rates increasing, the price of gold should be down significantly, but it is doing the opposite."

Stoeferle said another wave of inflation could provoke "gold mania" in the Western world, as could recession.

"Recession could really be a driver for higher gold demand from the Western world as it is a brilliant recession hedge. Once the market realises that it's not going to be a soft landing [for the world economy], this could be a big driver for gold demand."

Whilst miners are starting to show the impact of higher gold prices on their balance sheets, their stock prices have lagged behind the gold price charge. 

"The quarterly numbers of the big producers have been outstanding and much better than expected by the market. At some point, hopefully, generalists will realise that the big producers are cashflow monsters," Stoeferle said. "Since last year's Precious Metal Summit, gold has outperformed the miners. Usually, in the later stages of a gold bull market, mining stocks should massively outperform the price of gold, so this is telling me we are not there yet, but at some point, it will happen."