"President Trump's war against the Fed's independence could cause so much damage to the bond, stock, and dollar currency markets that investors might flee into gold, pushing its price up to $5,000 per troy ounce, Goldman Sachs said today in a research note seen by Fortune. Gold is currently priced at $3,596 on the Comex exchange, up 36% year-to-date and near its all-time high."
"With investors no longer able to rely on the Fed's independence, that changes the game for safe-haven assets, Goldman's Samantha Dart and her team told clients. "A scenario where Fed independence is damaged would likely lead to higher inflation, higher long-end rates (lower bond prices), lower stock prices and an erosion of the Dollar's reserve currency status. In contrast, gold is a store of value that doesn't rely on institutional trust," she wrote."
Gold could surge to $5,000 per troy ounce if perceived damage to Federal Reserve independence spurs investors to abandon Treasuries, equities, and the dollar. Gold trades near $3,596 on Comex, up 36% year-to-date and close to record highs. The White House has sought influence over the Federal Open Markets Committee, pursued investigations of Fed officials, and signaled a desire for leadership aligned with lower interest rates. Loss of Fed credibility would likely raise inflation expectations and long-term yields, depress stocks and the dollar's reserve status, and increase demand for gold as a trust-independent store of value.
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