Gold remains on course to reach $6,000 an ounce around the turn of the year despite its recent pullback, because the decline was driven by paper trading rather than weaker physical demand, macroeconomist and Permanent Distortion author Nomi Prins said.

Prins made the comments on MINING.COM’s Top of Mine (YouTube) after silver posted three consecutive daily gains and moved back above $57 an ounce following a sharp correction from nearly $122. She restated her January forecast for silver to reach $120, saying the retreat reflected heightened tensions around the Strait of Hormuz rather than a change in the market’s underlying fundamentals.

“The silver producers that take ounces out of the ground cannot get it to the hands of real end buyers in India, the Middle East, in China fast enough,” Prins said.

Prins said physical demand continues to exceed supply even as paper trading remains heavy across precious metals markets. She said trading in the iShares Silver Trust amounts to between 5 billion and 10 billion ounces a year, compared with about 820 million ounces mined annually. She also said the silver market is in its sixth consecutive annual supply deficit before taking into account future demand from artificial intelligence data centres and emerging technologies.

That distinction between physical supply and paper exposure is central to her argument. Precious metals prices can be influenced by futures, exchange-traded products and other financial instruments, while fabricators, industrial users and bullion buyers rely on metal that can actually be delivered. Prins said the recent pullback did not change that underlying physical balance.

Copper supports her longer-term outlook because it trades more closely in line with physical fundamentals, Prins said. She expects copper to reach $7 a pound by year-end after rising as high as $6.71 in May. Prins noted that utilities frequently secure supply years before construction begins, and said the copper market is less affected by speculative paper trading. Copper is widely used in power grids, construction and electrical equipment, making it a closely watched input for electrification and data-centre buildouts.

Buying ahead

Prins said governments are increasingly displacing markets as the main force shaping commodity prices, a theme she examines in her forthcoming book Commodity Wars. She cited Washington’s support for domestic rare earth supply chains as part of a broader effort to counter China’s decades-long investment in critical minerals.

She also expects the US Federal Reserve to keep interest rates unchanged at its next two meetings, arguing that inflation continues to ease while oil prices remain in the $70 to $80 range. Interest-rate expectations are closely watched in gold markets because bullion does not pay interest, but Prins said even if policymakers unexpectedly tighten further, her bullish outlook for gold would remain unchanged.

Prins expects major gold producers to report strong cash flow during the current earnings season. She said companies including Barrick Mining (TSX: ABX)(NYSE: B) and Newmont (NYSE: NEM)(TSX: NGT) are continuing to sell gold near record prices while keeping production costs well below current bullion prices.

“They’re going shopping,” Prins said. “They’re buying mining projects down the curve, junior developers, junior explorers, prospects, companies in gold.”

Prins acknowledged that her $120 silver target appears aggressive after the latest correction. However, she said the metal nearly tripled from about $40 over the past year and continues to be supported by a structural supply deficit, despite ongoing price volatility.

“It’s really an interesting volatile time, but if you can stomach that, the upside is quite high from here,” Prins said.