Gold ‘could easily go to $5,000 or $10,000 in environments like this’ – JPMorgan’s Jamie Dimon
By Ernest Hoffman
(Kitco News) – Given current market conditions, it makes sense for investors to eat the opportunity cost and hold gold in their portfolios, as the precious metal could easily double in price from its current all-time highs, according to JPMorgan CEO Jamie Dimon.
Dimon is by no means a gold bull, so admitting that there is “some logic” in owning it even after its massive price rally is a major concession for him.
“I’m not a gold buyer — it costs 4% to own it,” he told Fortune’s Most Powerful Women conference in Washington on Tuesday.
“But it could easily go to $5,000 or $10,000 in environments like this.”
“This is one of the few times in my life it’s semi-rational to have some in your portfolio.”
Dimon added that asset prices look stretched across the board right now, with valuations “kind of high across almost everything at this point.”
Other senior voices at the banking giant have been sounding the alarm about the current macro environment and the importance of holding gold.
On August 11, David Kelly, Chief Global Strategist at J.P. Morgan Asset Management, said the Fed’s preemptive rate cuts will stoke inflation, so investors should diversify into alternative and international assets – like gold – to protect themselves.
In a detailed inflation forecast published on LinkedIn, Kelly wrote that the inflation temperature in the United States is about to rise.
“In a still-growing economy, this persistent inflation overshoot ought to be enough to convince the Fed to maintain interest rates at current levels, which are not restrictive by historical standards,” he added.
“However, given political pressure, we now expect them to cut the federal funds rate by 50 basis points this year and 75 basis points next year.”
Kelly said these rate cuts probably won’t be enough to boost economic growth or raise overall inflation, but they could further inflate housing and other asset prices.
“Moreover, while it might temporarily cut borrowing costs for the government, it could worsen the long-run fiscal outlook by enabling the federal government to run even bigger primary deficits and eroding investor confidence in the Fed’s determination to hold inflation in check,” he warned.
“For investors, the persistence of inflation would limit potential capital gains on high-quality bonds, even with the Fed easing or in a weaker growth scenario.
It could also, in time, put further downward pressure on the dollar.”
“This underscores the need to broaden the diversification of portfolios to include alternative and international assets.”
Kelly said they expect year-over-year CPI inflation to rise from 2.8% in July to 3.5% by Q4 2025, before drifting back down to 2.8% by Q4 2026.
“We expect year-over-year consumption deflator inflation to rise from 2.6% in July to 3.3% in 4Q2025, before drifting down to 2.4% by 4Q2026,” he said.
While Kelly believes that above-target inflation “should be sufficient reason for the Fed to keep short-term interest rates where they are, given continued economic growth and an unemployment rate that is exactly at the Fed’s 4.2% long-run expectation,” there’s another type that’s often overlooked: asset price inflation.
“Much has been said about rising consumer prices in recent years, with the CPI increasing by 26% in the six years ending in June 2025,” he wrote.
“However, it is worth recognizing that over the same period, the median price of an existing single-family home has climbed by 51% while the S&P500 has risen by an astonishing 111%.
While super-low interest rates over much of this period have greatly increased the wealth of American households, they have also pushed home prices to unaffordable levels for many young families while generating asset bubbles that could well end badly.
While not directly part of their mandate, the Fed would be well advised not to add further fuel to already bubbly asset inflation.”
Lastly, Kelly said that the Federal Reserve “has no good reason to limit borrowing costs for the federal government.”
“While it may seem attractive to lower interest costs that now account for more than half of deficit spending, the real problem with deficits is not the market’s unwillingness to finance it but the public’s unwillingness to elect representatives who are serious about tackling it,” he said.
“Lower short-term interest rates could well lead to higher long-term interest rates almost immediately, if investors concluded that the Fed was willing to accept higher inflation in the long run to mollify the administration in the short run and that monetary policy would not act as any real check on fiscal largesse going forward.”
Kelly wrote that he expected the Fed would indeed cut rates by 25 basis points in September and a further 25 basis points in December.
“While the outlook for inflation and unemployment doesn’t justify this easing, we expect the Fed to follow through on it anyway,” he said.
“Their rationale may be that it is a close call either way, and, with inflation expected to fall eventually, there may not be much harm in cutting rates preemptively.”
Kelly called this “a dangerous logic.”
“Monetary policy is a long series of close calls and throughout its history, the Fed has made these calls in accordance with its mandate from Congress and, as Jay Powell frequently puts it, solely in service to its public mission,” he said.
“If it strays from this, even in a close call, and even to try to ward off a more direct attack on its independence, it risks further eroding trust in the U.S. financial system and thus, U.S. financial assets and the dollar.”
“Given this risk, and the probability of continued, somewhat elevated inflation, it still makes sense for investors to broaden the diversification of their portfolios to include some alternative assets, particularly those that can best offset inflation, as well as international assets denominated in foreign currencies,” Kelly concluded.
JP Morgan has consistently been telling investors that geographic and currency diversification is the key to successfully navigating today’s markets.
In May, Grace Peters, global head of investment strategy at JPMorgan, said that both European and U.S. equities should perform well in 2025, while gold is set to outperform.
“The notion that growth is going to be positive, corporate earnings will be positive, the Fed will cut a bit, but not extensively, is the backdrop that we see, is what lands us to this notion of geographic diversification, still being pro-risk here, but in an intentionally diversified way,” she said.
When asked how JP Morgan is looking at gold in this environment, Peters said, “We still like it.”
“There's a few different things we're trying to solve for,” she explained.
“U.S. overweight positions is one, so diversifying by geography and by currency is one of the elements, but also just broader geographic hedging.
And there's definitely been a way over the last couple of years as to how gold has traded, and we think that those structural changes are likely to keep playing out.”
“We came into this year with a price target for gold of $3,500,” Peters said.
“We've just broken through that [in late April].
So again, looking 12 months forward, north of $4,000, we think, would be a new reasonable price target for gold, with key drivers being still emerging market central banks.
When you look at EM positions versus DM central banks, there's quite a lot of room still for EM central banks to position closer to where their DM counterparts are, and also retail ETF buying.”
She added that with the expectation of GDP being positive, JP Morgan expects that demand for gold from jewelry and the tech sector should also be resilient and could grow over the next 12 months.
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