Viral forecast argues gold could rise to $12,595 an ounce

A forecast by Dan Oliver, founder of Myrmikan Capital, has gone viral online by arguing that central-bank demand could justify gold trading as high as $12,595 an ounce. Gold was trading around $5,060 per ounce on Tuesday, up 72% over the past 12 months. Oliver frames gold as a share of central-bank reserves and notes that "the market forced central banks to maintain gold reserves of between a third and a half," which would imply a price between $8,395/oz and $12,595/oz.

He says gold could move closer to 100% of reserves in a "cleansing" that drives down the value of other holdings, such as US Treasurys. He argues rising stress in the US debt market and a strained global dollar system will push foreign investors away from dollar assets, forcing the Federal Reserve into large-scale bond buying.

Oliver describes a next phase of the gold bull market that has not yet begun and warns of a "government bond death spiral," in which higher rates raise interest payments, worsen deficits, swell Treasury supply and push rates still higher.

United States

gold price, dan oliver, myrmikan capital, gold reserves, central banks, us treasuries, federal reserve, bond buying, dollar system, debt market