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Why gold prices could reach $5k in 2-3 years: Strategist

Nick Santiago, Founder and Chief Market Strategist at InTheMoneyStocks, joins Yahoo Finance’s Akiko Fujita to discuss the latest outlook on gold prices, as Berkshire Hathaway announces a new position in Barrick Gold.

Video Transcript

AKIKO FUJITA: Let's talk about Barrick Gold first because we've heard Warren Buffett say before that he's just not into gold. In fact, I think I've heard him say it doesn't do anything but sit there and look at you. And yes, this is a gold miner, not a stake in gold. But how surprised were you?

NICK SANTIAGO: I was a little bit surprised. But I think Warren now is taking a step back, and he's letting other money managers handle what he's doing in Berkshire Hathaway. So I have to think this is a little bit of a surprise for me, but I believe it's the right move. I think he's doing the right thing there. I mean, we've-- we've already seen the move that gold has had recently. And with all the central bank intervention that's going on around the world-- it's not just the Federal Reserve-- you have to think that gold prices are going to go higher down the road.

AKIKO FUJITA: I mean, speaking of which, we're seeing gold up about 2% today. We had Credit Suisse now raising their 2021 gold price target or forecast to $2,500 an ounce. That wouldn't be significantly higher than what we're seeing it right now. How much higher do you think it can go?

NICK SANTIAGO: Well, in the longer term, I think it goes a lot higher. In the shorter term, I'm not so bullish on gold. I think it needs to have a little bit of a rest here and do some backing and filling. But once you break these psychological barriers and, you know, markets start to run, it-- it can go a lot higher. I mean, we just recently made a new all-time high for gold before it backed off. So I-- I'm thinking in about two or three years, we could see $3,000, $4,000, $5,000 gold.

AKIKO FUJITA: $3,000, $4,000 $5,000?

NICK SANTIAGO: In-- you know, I'm talking about maybe three, four years from now. You get to 2024, 2025. You know, you just think about all the debt levels that are out there, I mean, that's really the fundamental reason why gold has moved the way it has. What's really stopping it? Are we going to go backward? Are we going to, you know, start to reduce our debt load? I mean, the money printing has-- has taken place here.

It's taking place in Japan. It's taking place in Europe. It's taking place in China. And we could go to all the rest of the central banks around the world, and that's really the fundamental catalyst for gold moving higher. But like I said, in the short term, I'd wait on a pullback, a little bit more of a retreat, before getting back involved in it. But it does have a higher prospect of going, you know, significantly much above where it was.

AKIKO FUJITA: One of the sectors we're seeing get hit hard today are financials, down about 1.4% there. On that front, we did see Berkshire sell about 26% of its stake in Wells Fargo, JPMorgan 61% of its position. How-- how are you positioned in financials right now?

NICK SANTIAGO: Well, I don't love the financial chart right now, so I have stayed away from them. But they are on my radar. Full disclosure, I do own call options in Wells Fargo, so I'm watching that one pretty closely. But, you know, I-- I think right now, if you start to see bond yields move higher, financials are going to improve significantly.

And I do think that we are coming into, and I know this might sound crazy, but a generational low for bond yields. And if that happens, you're going to start to see the financials improve pretty quickly. And we'll-- we'll keep that on our radar. But right now, today, they're suffering, but a lot of it's on the back of all these 13F filings that have just come out recently.

AKIKO FUJITA: Nick Santiago, good to talk to you. He is the founder and chief market strategist at InTheMoney Stocks.