Credit Suisse’s Pozsar: Gold price could double to $3,600 in this case

According to Credit Suisse’s Zoltan Pozsar “gold could double to $3,600 per ounce if Russia responds to G7’s oil price cap by a decision accepting gold for crude oil amid what he has described as unthinkable macro scenarios”.

Pozsar further noted that a year-end money-market liquidity crunch is probable if Russia decides to accept gold for oil in light of the latest sanctions.

Pozsar explained that “This was a year of the unthinkable macro scenarios and the return of the statecraft as the dominant force driving monetary and fiscal decisions”. In this scenario, Russian President Vladimir Putin responds to the recently introduced $60-a-barrel oil price cap by asking for a gram of gold for two barrels of crude.

At current market prices, the cap of $60 per barrel for Russian oil equals the price of a gram of gold, Pozsar said. What essentially happens here is the US pins Russian export at this price, and Russia, in return, fixes it at a gram of gold. And this would come at a time when the US works to refill its strategic reserves with cheap petroleum.