Is gold repeating the "2008 script"? Wall Street giants are bullish up to $11,400!

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Source: Caixin

In the recent U.S.-Iran war, gold not only “didn’t get carried along,” it also plunged hard and even once entered a bear market zone. But this apparently hasn’t completely extinguished analysts’ optimistic sentiment.

Peter Schiff (Peter Schiff), a famous economist on Wall Street and CEO and Chief Global Strategist of Euro Pacific Capital, believes that the current selloff in gold is reenacting the script of the “2008 global financial crisis,” and boldly predicts that gold will rebound to $11,400.

Gold prices hit a historic high of $5,608 per ounce in January this year, then fell sharply. As of the time Schiff posted, the trading price was about $4,462 per ounce, down roughly 27% from the peak. Even so, compared with a year ago, gold prices are still up nearly 48%.

Specifically, Schiff’s reasons for being bullish on gold are based on historical comparisons to the global financial crisis.

On his social media platform X, he wrote: “In the early stages of the 2008 global financial crisis, gold prices crashed by 32%, accounting for about 40% of the gains from the prior bull market. After the bottoming rebound, the gold price surged 178% over the next three years.”

“Today, the gold price once fell to around $4,100, down 27%, which also accounts for about 40% of the rise since $2,000. If it rebounds 178% from the low point, the gold price will reach $11,400.” he added.

What’s interesting is that these figures almost perfectly match— the percentage that gold has pulled back from its January peak is comparable to the initial decline in gold at the beginning of the 2008 gold-price crash, and after that, gold began one of the greatest bull markets in history.

Is the war good news or bad news?

At present, the market is uneasy about whether a ceasefire or a peace agreement would reduce gold’s geopolitical premium, and Schiff firmly pushes back on this.

“If the war ends quickly, that would be negative for gold. But that isn’t enough to offset all the positive factors. In addition, the government still needs to pay for additional weapons and the costs of rebuilding the areas that were destroyed. Therefore, compared with a scenario where a war never happened, the fiscal deficit and inflation will be bigger,” he explained.

And even before the current fall in gold prices, he had already put forward similar views and pointed out that since being bullish on gold before the war, people should now be even more bullish.

“War means a surge in America’s fiscal deficit, food and energy prices skyrocketing, an economic recession, rising unemployment, stock, bond, and real estate prices crashing, an increase in terrorist activities, and a financial crisis,” he added.

Misjudging the Federal Reserve

Schiff also criticized the logic behind this selloff. He believes that traders made a fundamental mistake—they are selling gold out of concern that persistent inflation will prevent the Federal Reserve from cutting rates.

“It makes no sense to sell gold because rising inflation will prevent the Federal Reserve from cutting rates, when interest rates are already very low,” he wrote: “Falling real interest rates are good for gold, but what truly needs rate cuts is the stock market.”

He predicts that once high interest rates push the economy into a recession, the Federal Reserve will change strategy—cut rates and restore quantitative easing— and this move will be a strong positive for gold.

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Responsible editor: Zhu Hunan