Economist and veteran investor Mark Skousen, known for predicting the Black Monday crash of 1987, has cautioned that gold’s current rally makes it a speculative bet rather than a sound long-term investment.
Skousen argued that while gold mining stocks still offer opportunities due to their leverage and improving profit margins, the metal itself has reached unsustainable levels, he said during an interview with David Lin published on October 14.
He noted that the widening gap between the rising price of gold and the relatively stable cost of mining has boosted profit margins for producers, citing Kinross Gold as one of his top recommendations with potential for strong gains.
However, with gold prices soaring to around $4,200 per ounce, a jump of almost 55% this year, Skousen warned that the asset may be overextended.
He described the surge as “more of a speculation” than a prudent investment, suggesting that investors consider taking profits rather than entering at current levels.
“Gold itself at $4,200, that seems to be an extremely high price. It’s more of a speculation at this point than just a sound investment that you buy and squirrel away. <…> Let’s hope that a correction takes place and gives us a better opportunity to buy gold,” he said.
The investor, whose market calls have earned him credibility, emphasized that a correction would provide a healthier opportunity to accumulate gold in the future.
Gold now targeting $5,000 spot
Indeed, gold’s momentum has led some analysts to suggest it could target the $5,000 mark in the coming months. However, the precious metal’s momentum indicators are showing signs of exhaustion, suggesting that a possible pullback may be imminent.
Market sentiment around the yellow metal has further strengthened after Federal Reserve Chair Jerome Powell signaled a dovish stance, fueling expectations of upcoming rate cuts.
Traders are now pricing in a 25 basis-point reduction in October, followed by another in December.
At the same time, renewed trade tensions between the United States and China, coupled with a prolonged U.S. government shutdown, have amplified safe-haven demand.
The shutdown has halted the release of key economic data, complicating policy decisions in the U.S. and abroad.
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