SHANGHAI, Mar 1 (SMM) - On Feb 28, Pierre Lassonde, CEO of Firelight Investments, said that the Russia-Ukraine conflict may be protracted. If it lasts for two, three weeks or a month, the oil price will further rise from the current level to $200/mt. In the medium term, the gold prices will soar to $2,200-2,400/oz. In the next five years, if the Dow Jones index shrinks by 20%-30%, the Dow Jones to gold ratio may converge to 2:1, and the gold prices will rise to $10,000/oz.
In an interview, he said that Germany changed its strategy and will provide military assistance, which has greatly changed the possible outcome of this war. The longer this conflict lasts, the more profound the impact will be, especially on the energy market. Lassonde predicts oil prices will reach $200/mt if this conflict lasts for two, three weeks or even, a month.
Lassonde's remarks came as Germany announced plans to provide Ukraine with 1,000 anti-tank weapons and 500 surface-to-air missiles as soon as possible, breaking the long-standing principle of not exporting weapons to conflict areas.
Lassonde pointed out that with the rise of energy prices, the sustained inflation will also rise. He said that the inflationary pressures the US sees today are the same as those the US saw in the 1970s. From 1976 to 1981, the inflation rate, the interest rate, the US dollar and the gold prices rose every year. The history will probably re-staged in the next four years.
Lassonde claimed that, in the medium term, the gold prices will soar to $2,200-2,400/oz. In the long run, if the Dow Jones index shrinks by 20%-30% in the next five years, the Dow Jones to gold ratio may converge to 2: 1, which means the gold prices will rise to $10,000/oz.
This situation happened twice in history, in 1930s and in the early 1980s, when the Dow Jones to gold ratio was 1:1.
Lassonde said that the current ratio of 1:1 was too radical, because it means that the stock market will have to fall sharply from the current level. Moreover, with so much liquidity created by central banks of so many countries, a correction of more than 30% is unlikely.
Lassonde predicted that, according to the ratio of 2:1, plus a 30% correction, it is possible that the gold prices may reach to $10,000/oz, and it may happen within the next five years.
