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

Cailianshe News, March 25 (Editor: Huang Junzhi) In the recent U.S.-Iran war, gold not only failed to “get a lift,” it suffered a sharp drop and even briefly entered a bear market zone. But it seems this hasn’t completely extinguished analysts’ optimistic sentiment.

Peter Schiff (Peter Schiff), a well-known Wall Street economist, 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 he boldly predicts that gold will rebound to $11,400 later.

Gold prices hit a record 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 bullish case for gold is based on historical comparisons to the global financial crisis.

He wrote in a post on his social media platform X: “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 and rebound, gold surged 178% over the next three years.”

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

Interestingly, these figures match almost exactly— the percentage decline of gold from its January peak is comparable to the initial drop in gold prices during the 2008 crash, and after that, gold began one of the greatest bull markets in history.

Is war good news or bad news for gold?

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

“If the war ends quickly, that would be negative for gold. But that’s not 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 situation where no war ever happened, the fiscal deficit and inflation will be greater,” he explained.

And even before the current gold price decline, he had already put forward similar views and pointed out that gold, which was expected to perform well before the war, should be expected to do even better now.

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

Misjudging the Federal Reserve

Schiff also criticized the logic behind the selloff, saying he believes traders made a fundamental mistake: they sold gold out of concern that sustained inflation would prevent the Federal Reserve from cutting interest rates.

“With interest rates already so low, it makes no sense to sell gold because rising inflation would stop the Federal Reserve from cutting rates,” 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 course, lower rates, and restore quantitative easing. This move will be a strong positive for gold.