Gold Price Forecast for The Next Decade

 Date : Wed, October 16, 2019

 

 Source : fxempire.com

 Author : AG Thorson

 

It appears each decade has an investment theme that favours one asset class over another. What performed well over the last decade generally underperforms during the next.

 

• During the 1990s, the stock market was the place to be and an  explosion in the  Internet stocks led to the dot.com bubble causing The Nasdaq to rally from 330 in 1990 to 5100 by 2000.
  
  
• During the 2000s, precious metals and commodities were the best performing assets and led to Gold to rally from a low of $255 in 2001 to $1923 by 2011.
  
  
• During the 2010s, money flows switched back to the stock market and the DOW bottomed at 6469 in 2009 and prices reached 27,400 in July 2019.

 

It is surely impossible to get into at the bottom and out at the top in real-time and the transition period from one assets class to another usually takes a couple of years .  Ultimately, the key is in recognizing it. After a 10-year bull market in stocks, it stands to reason another asset shift is unfolding. That combined with the recent breakout in gold leads me to trust that the next decade will favour precious metals and commodities (tangible assets).

 

 

Monthly Gold Chart

 

 

Gold broke out of the 6-year basing formation in June when prices closed above $1400 and the overall structure is similar to the 1997 – 2003 rounded bottom that generated an 8-year bull run. based on this trend, I suspect that gold will work its way higher to finish the larger degree 10-year pattern and breakout to new all-time highs in the next decade.

 

 

Quarterly Gold Chart

 

 

One of the easiest ways to achieve potential price targets is with a simple ABC measured move and the initial advance (A) is followed by a borader correction into (B); the halfway point. By adding A to B, we come up with C (the price target). In this case, an A=C target suggests roughly $8000.

 

 An $8000 price target aimed for gold almost sounds ludicrous.  But what could cause prices to reach such extreme high levels?

 

• A collapse in confidence- A total collapse in confidence in Governments and their ability to manage.
• Widespread fear- Governments may resort to debt monetization and currency depreciation to inflate away debt.
• Speculation- A surging uptrend and new all-time highs in precious metals leads to the fear of missing out and sparks a speculative bubble.
  
  

 Will gold reach $8000 during the next decade? In all honesty , I have my doubts as well. However, I do see the potential for the above ingredients. Whatever the outcome, I think a new gold bull market is just getting started and investors should consider revision in allocation.

 

 

 Keyword : sterlinghousetrust.com, Sterling House Trust, SHT