After notching a breakthrough rally of nearly $300 last week, the gold market is rebuilding momentum. David Miller, Co-Founder and Chief Investment Officer of Catalyst Funds as well as Portfolio Manager of the Strategy Shares Gold Enhanced Yield ETF (GOLY), stated that even though gold needs time to digest this round of sharp gains in the short term, the trajectory for gold to retest $5,000 per troy ounce remains clear.
In an interview, Miller said it may still take a while for gold to reclaim its all-time high, yet the long-term fundamental drivers underpinning bullion remain intact. PeRSIstent government deficits, inflation, and global central banks’ demand for asset diveRSIfication are eroding the appeal of traditional fixed-income assets. He believes gold can eventually hit $5,000 per ounce, though investors should not expect this milestone to be reached imminently.
“I think we could see $5,000 an ounce, but it will probably take around two to two and a half years to get there,” he remarked.
Central Bank Purchases and USD DiveRSIfication
Miller pointed out that gold’s prior push toward the $5,000 mark was driven by multiple catalysts, including falling interest rates, speculative investment demand, and most crucially, massive central bank buying. While the urgency behind such purchases has eased somewhat, the structural incentive for sovereign entities to diveRSIfy away from USD-denominated assets is still firmly in place.
He noted that geopolitical and economic tensions have forced nations to reassess what share of their sovereign wealth should remain allocated to US dollar assets. Even as some immediate tariff-driven pressures fade, he projects China in particular will continue to act as a major long-term buyer of gold.
Against the backdrop of continuous deficit spending in the United States, central bank demand will offer substantial underlying support for gold prices. He forecasts gold could deliver mid-to-high single-digit percentage gains for the full year.
Deficits, Inflation and Productivity Growth
Miller’s long-term bullish outlook comes amid a consolidation phase following gold’s powerful run-up. He argued that despite the recent pullback, the core investment thesis for the market has not materially shifted. The fundamental issue lies in the deteriorating long-term purchASIng power of fiat currencies as governments run expanding deficits atop elevated debt levels.
He explained that governments historically have three broad avenues to resolve heavy debt burdens: inflation, a dramatic surge in productivity, or fiscal austerity. The first route devalues the real burden of debt via inflation; the second relies on robust economic productivity expansion, potentially fueled by artificial intelligence. Miller contended that a meaningful productivity jump could offset part of the inflationary pressures stemming from high indebtedness.
“You can inflate away the debt, paired with productivity gains driven by artificial intelligence,” he said.
The third option is fiscal tightening, yet Miller stressed this carries steep political hurdles, as drastic spending cuts inevitably trigger painful economic fallout.
He added that sustained inflation around 3% — rather than a full return to the Federal Reserve’s 2% target — may not pose a systemic problem over the long run if nominal economic growth stays sufficiently strong. “If we don’t hit the 2% inflation target and instead settle in the 3% range… coupled with some productivity expansion, I believe it’s sustainable from a long-term perspective,” he stated.
Yield Structure of Gold ETFs
For gold investors, peRSIstent inflation reinforces the case for holding tangible hard assets, especially when bond yields fail to deliver attractive real returns after adjusting for inflation and taxes. Miller said this dilemma forms the core investment logic behind the Strategy Shares Gold Enhanced Yield ETF.
Traditional bonds generate coupon income, yet their purchASIng power advantage evaporates rapidly when inflation nears their nominal yields. Miller warned investors may end up with negative real returns after tax deductions.
Gold and other physical assets deliver inflation hedging protection but generate no cash flow on their own. GOLY is engineered to fill this gap by combining gold market exposure with income streams from investment-grade corporate bonds.
“We believe overlaying bond income with gold price exposure gives investors the best of both worlds,” he commented.
From a market perspective, if central bank gold purchases, U.S. fiscal deficits and inflation expectations keep building, gold as an inflation hedge and depreciation hedge will likely attract capital inflows over the medium and long term. In an environment where interest rates and real yields see limited meaningful improvement, pullbacks in gold prices can be viewed as strategic entry opportunities.