The threat of American trade tariffs could have an unexpected outcome for Canadian gold producers — it could make them 100 times richer.
That’s because a noted American gold bug is predicting the precious metal will top USD$26,000 per ounce if US president Donald Trump follows through by imposing blanket tariffs on trading partners.
As inflation erodes the purchasing power of paper currencies, gold’s appeal as a stable store of value often grows, driving up demand. In 2024, gold prices surged by 26%, surpassing $2,600 per ounce.
On Wednesday it was just off a record $2,762 at $2,755.
A year ago, it was just below the $2,000 mark, at $1,999.
Gold guru Peter Schiff believes Trump’s tariffs are just the beginning. Fuelled by the war in Ukraine and global uncertainty, central banks and financial institutions have been buying up gold at a furious pace, pushing up demand — and price.
“If gold can go from $20 an ounce to $2,600 an ounce, it can go from $2,600 to $26,000, or even to $100,000. There’s no limit because, again, gold isn’t changing — it’s the value of the dollar that’s decreasing,” he said in a recent interview.
Schiff is the founder and chairman of precious metals dealer SchiffGold and is the founder chief economist and global strategist at Euro Pacific Asset Management. An ardent Trump supporter, he has gained a cult-like following for correctly predicting the 2008 Financial Meltdown.
But he has been an ardent critic of Trump’s proposed trade tariffs on major trading partners — especially Canada, which happens to be the fourth largest gold producer in the world behind China, Russia and Australia.
Kris Holthe, a local broker with Calgary-based New World Precious Metals, said he admires Schiff but thinks the bullion bull is exaggerating in his exuberance. But he nonetheless remains optimistic for both gold and especially silver — and particularly if Trump follows through on his tariff threat.
“He’s a pretty brilliant guy but it’s (Schiff’s comments) a bit far-fetched,” Holthe said in an interview. “The reality is that it’s a pretty tight market. But gold has strong fundamentals right now. We expect 2025 to be another good year. It will continue to do well.”
That’s because tariffs will essentially push the price of currency up by 25%, something that’s never been done before. By contrast, gold usually appreciates about 9% per year over the longer term.
The other net effect of tariffs will be to drive other countries away from the US dollar as a reserve currency and provide alternate means of payment. Already, the BRICS nations that comprise 40% of the world’s population are doing just that by building up gold reserves.
“They are taking steps to reduce their reliance on trade using the US dollar,” Holthe wrote in The Western Standard in an analysis of Trump’s tariffs in December. “As for the price of gold in this global environment… it is hard to see how it can do anything but rise.”