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The stage has been set for an epic gold price run for some time. When the central bank reversed course last June and said interest rates would be heading back down, the implication was huge: after a decade of already record-low rates, the economy still was not healthy enough to handle even a modest rate-tightening scheme (an increase in rates). It became clear that the nation – and world – could be floundering for years to come, and gold made a break for it.
The rest, as they say, is history. Gold prices maintained a general upward trend through the rest of 2020. Then the pandemic hit. With the onset of the pandemic, has come record government spending and “whatever-it-takes” Federal Reserve quantitative easing (QE) – gold’s favorite foods.
And now gold has made history as it gorges on a feast of unrestrained money printing and rapidly growing debt. Last Monday, gold breached its previous all-time high of 1,923 dollars per ounce. Now at 1,960 dollars per ounce, gold price is up more than 10% in the first four weeks of the third quarter. That follows a 13% gain in the second quarter, and it means gold has appreciated 30% since the beginning of the year. It also translates to a 46% gain since June 2019, when the Federal Reserve announced rates would drop.
The question now is this: What’s the way forward for gold? Conditions remain very positive for the metal. But does that really mean gold prices will continue their flight into the heavens? Experts resoundingly say, “Yes!” Read on to understand why.
Gold Price Could Reach $5,000 in Next 3 Years Says Analyst
One of the biggest drivers of gold gains is highly accommodative monetary policy. A lower-interest-rate regime is always welcomed by gold. But when the Federal Reserve goes even further and commits to unlimited quantitative easing, gold rolls out the red carpet. QE is regarded by many as a guarantee that dollar debasement and inflation is on the way. Because of this, we typically see a flight to gold when QE is announced.
It appears the economic conditions that invite drastic monetary policy will be with us for some time. This is the principal reason there’s so much optimism over gold right now. The likelihood grows that highly accommodative monetary policy will be a fixed part of the economic landscape for the foreseeable future. And so gold continues to salivate.
In addition, the COVID-19 pandemic remains the foundational energy behind both current monetary policy and gold gains. Not only does effective virus containment remain elusive, but the number of cases continues to surge around the world. Since the end of June, the number of new cases has jumped by a stunning 35%. There’s no end in sight to the pandemic, and that suggests there’s also no end in sight to the virus’s economic fallout. Translation: Look for even more drastic monetary policy and record-setting federal deficit spending throughout at least the near term. As long as this environment persists, there’s little reason to expect gold prices to stop moving higher.
These conditions, combined with the power displayed by gold as it recently smashed upward through two key benchmarks, suggest to one analyst the metal’s best days lay ahead. In fact, he’s identified 3,500 dollars as the upper range of his 24-month price target for a gold price.
Speaking recently to CNBC, Barry Dawes of Martin Place Securities emphasized the incredible strength of the precious metals bull market that’s in play right now. “What is really significant is how quickly it [gold] went through that 1,923 dollars [level], which was the previous high. The other thing, which was … very, very important, was the fact that it went through 1,800 dollars [level] and with similar ease,” said Dawes. “That’s basically saying to me that this is a very, very strong market.”
“I’m looking for 3,500 dollars within two years,” Dawes added. He said he does expect to see some consolidation (sideways movement) along the way as gold continues rising overall. Still, the base strength of this ongoing surge in gold price is “very significant” in his opinion.
And, if you like the sound of 3,500-dollar gold within two years, how does 5,000-dollar gold within three years sound? That’s the projection of Augusta Precious Metals senior analyst Devlyn Steele. In a special video alert, Steele recently detailed his projection for not only 5,000-dollar-per-ounce gold by 2023 but 125-dollar-per-ounce silver, as well.
Mr. Steele is known for predicting not only the 2008 financial crisis but also the epic precious metals rise that immediately followed. From 2008 to 2011, gold gained 160% and silver soared nearly 400%. According to Steele, the economic landscape we’re seeing today is similar to the one we lived through during the financial crisis.
“The same economic factors that set into motion a three-year bull run [for precious metals] 12 years ago are in place again today,” he said.
Gold Gains Likely Due to Current Conditions Despite Lengthy Run
The factors that drive gold price are not complicated. The most significant among them is drastically loose monetary policy. We obviously are watching that play out right before our eyes this year. And it’s not the first time.
Now that gold has surpassed its all-time high, some are wondering how much further it can go. If recent history is any lesson, the current precious metals bull run could have many years to run.
In January 1980, the price of gold hit what was then a record high of around 850 dollars per ounce. Twenty-eight years later, in January 2008, gold finally breached that price at the outset of the financial crisis. Did gold cease moving upward once it had set a new price high? We know it did not. Gold’s overall upward trend continued for three more years, even as there was a bit of a sell-off during mid-2008.
Here’s what you need to know: The core factors driving gold price upward right now remain in place and it appears they’ll be with us for some time to come. This is why experts are so optimistic about not only a near-term prospect for gold gains but the gold price outlook for the next several years. If Barry Dawes’s projection is correct, it means the price of gold hits 3,500 dollars per ounce in the next two years. That would represent another 80% increase in gold price from present levels. And what about Devlyn Steele’s highly calculated projection of gold gains up to 5,000-dollar-per-ounce by 2023? If that proves accurate, it means retirement savers would see gold increase by another 150% from its current price. We’ll be watching to see how things unfold.