Gold's trajectory over the long-term is several thousand dollars higher, with an average target price of $12,500, and it only makes sense when you look at the historical growth of the metal, according to Pierre Lassonde, chairman of Franco-Nevada.
"If I use the compounded annual growth rate over 50 years, that's got to give you a pretty good idea of where the gold price is going to go, and if you use that number, you get $12,500 in 30 years' time," Lassonde told Kitco News on the sidelines of the Denver Gold Forum.
Lassonde added that applying the annual average growth rate from 1970, the long-term projection would be $25,000.
"I think gold is in a good place. The financial demand is being driven by negative interest rates. Should the U.S. treasury 30-year bond yield ever, ever go negative, like in Germany and France, God bless, we're looking at $5,000 gold," he said.
On the economy, Lassonde said that a recession in the U.S. next year is unlikely.
"I think slower growth, but not a recession yet," he said, and added that trade wars and tariffs will negatively impact global growth. "What you see is the world economy slowing down."
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This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.