- Gold price forecasts jumped these weeks with the gold price.
- The highest ones reach thousands of dollars.
- “Smart Money” is predicting higher gold prices and may buy gold.
- The higher the price of gold goes, the more optimistic analysts and investors we see.
- But, analysts are betting seldom against the trend.
Is This The Beginning of a Beautiful Gold Price Bubble?
How high can gold price go?–are many investors asking in the last weeks as the upward trend is more and more clear. Is it possible that we are only at the beginning of the formation of a gold price bubble?
Gold futures price rose above the key psychological level of 1,800 USD in the last days, reaching a new 9-year high at $1,829.8. Gold futures’ all-time high in 2011 was by $1,920.70. But gold is on new historical highs in most other currencies (CAD, AUD, JPY, CHF, etc.). (Silver is nearing the 52-weeks high by $20.0.) See the charts below and at the end:
The reasons are clear, there is a lot of uncertainty in the economy. The second wave of Covid-19 is affecting a lot of countries already. Analysts are groping in the dark about the length and depth of the crisis. Central banks are pouring unprecedented amounts of money into the market. Although inflation is low now, government bond yields are even lower. Real interest rates are negative almost everywhere.
The jump in the number of U.S. coronavirus-infections causes fresh lockdowns and slows down the economic recovery. Also, a weaker dollar supports gold and other commodities.
Is Smart Money Forecasting High Gold Prices?
“Smart Money is Buying Gold”–we quoted earlier in May. I’m still bullish in gold and silver in the long term. I’m wondering what were greater investment banks, leading analysts thinking now. Especially, “smart money”–analysts with important influencing effect. So, I made a small research.
1. Gold Price Forecast: $5,000
“Rate hikes impossible without an economic crash. In the ensuing market mania, the manager says gold could rise as high as $5,000 an ounce in the next three to five years, more than doubling from its current price of $1,800”. By Diego Parrilla (ZeroHedge, Bloomberg)
2. Gold Price Forecast: $3,000-3,500
“Most people right now are not expecting $3000-$3500 gold prices next year–by this time next year. I am.” By Boris Dergunov (SeekingAlpha.)
3. Gold Price Forecast: $3,000
“I’m seeing more interest in gold from institutional investors and banks, for example, Bank of America analysts recently predicted $3,000/oz gold price by 2021.” (SeekingAlpha)
4. Forecast, 2020: 2,072, 2021: 2,528 USD
“The Economy Forecast Agency (EFA) is specialized in long-range financial market forecasts. Our specialists use mathematical and statistical methods of prediction based on the existing historical data”–they wrote. Their gold price forecast is $2,072 for December 2020 and $2,528 for the end of 2021. (Later, the trend is changing: 2022: $2,506, 2023: $2,833, and August 2024: $2,507.
5. Gold Price Forecast: $1,935-$2,190
“Our researchers believe the next target is $1,935”–wrote FX Empire. But they are also targeting $2,150 to $2,190 in the longer term. “We believe once Gold clears the $2,100 level, global investors will identify the rally more efficiently and the upside parabolic price move may extend very rapidly”–so FX Empire. (They also set silver targets to $23 and $28. Remarkable, because last time, silver traded by $19.7.)
6. Gold Price Forecast: $2,000
“Goldman Sachs raised its 12-month forecast on gold to $2,000/oz. from $1,800, citing low real interest rates and concerns over currency debasement. The bank also lifts its 12-month silver forecast to $22/oz. from a previous forecast of $15, expecting silver industrial demand to rise as the global economy recovers.”
7. Gold Price Forecast: $2,000
“Citigroup analysts projected that gold would rise to the $2,000 per ounce level before the global pandemic and the tidal wave of liquidity from central banks and governments that followed.”
8. Two Gold Price Forecasts: Going To All-Time High
“The case for gold holding above $1,800 is pretty strong, with the weaker U.S. dollar, surging Covid-19 cases, and some Fed officials questioning the U.S. recovery,” said Warren Patterson at ING Groep NV in Singapore. “It seems as though it is only a matter of time before we test the all-time high.” (Bloomberg.) (All-time high in 2011 was by $1,920.70.)
“Saxo Bank says gold will ‘reward the patient investor’ this quarter, sees record high on the horizon”–wrote CNBC.
9. Gold Price Forecast: $1,800
“The analysts at UBS have raised their year-end gold price forecast to $1,800 vs. $1,700 estimated before. For 2021 end-June forecast is kept at $1,800.”
10. Average Gold Price Forecast: $1,743
HSBC said in a note it expected gold to average $1,743 an ounce this year, but to fall to about $1,500 in the coming years.
11: Short-Term Forecast: $1,670, Long Term: 5,000
Difficult to say if this is good news or bad news, as most people invest short term. “Calls for $1,900 and $2,000 gold are everywhere I look at. (…) Gold is at a level of extreme resistance. (…) we will see a move down to $1,670 and possibly all the way down to $1,600 in a painstakingly long but necessary correction (…) gold prices will reach at least $5,000 over the next five to ten years.” By Sam Laakso
How High Will Gold Price Go, Then?
A positive, self-reinforcing spiral may have begun. The higher the price of gold goes, the more optimistic analysts and investors we see. And more and more people are buying gold, both small and large investors. As fresh central bank money is pouring into economies, in recent years gurus often talked about “all-asset bubbles” already. Perhaps this will only reach the precious metals in the next months?
But over the years, I’ve also observed that asset prices rarely reach analysts ’target prices (unless there’s a general bull market). It makes sense because if everyone thinks gold is worth three thousand dollars, no one will want to give that much for it. Investors want to buy cheaper, at least 15-20 percent lower so they can sell it at a good profit when it becomes 3,000. Except for a few very long-term-minded investors, but these are rare these days. For many, a few months are already a long period in speculation.
Another old observation is that in an upward trend, analysts predict mostly ten to twenty percent more than the current price. Perhaps because this method is most likely to approximate the future price. Going against the trend is very dangerous and often fails. Many try to find at least the correct direction of the prices.
Was gold a good investment in the past, or not? Don’t forget to read: DIY Fake News Generator –Was Gold a Better Investment, or Stocks?
Related Readings for You:
- DIY Fake News Generator –Was Gold a Better Investment, or Stocks?
- How to Buy Gold Coins, Bars, Jewels? 4 Ways, Essential Pros and Cons
- Are We Facing Epic Inflation, Horrific Real Interest, and Brutal Gold Price Explosion?
- 11 + 1 Grave Investment Errors Robinhood Newbies May Commit
- The 3 Biggest Challenges in Personal Finance Today
- Robinhood and The Woods of the Contrarian – Charts of the Day
Disclaimer
I’m not a certified financial advisor nor a certified financial analyst, accountant nor lawyer. The contents on my site and in my posts are for informational and entertainment purposes and reflecting my collection of data, ideas, opinions. Please, make your proper research or consult your advisors before making any investment or financial or legal decisions.
I have open positions in silver (long), platinum (long), junior gold miners (long), crude oil (short), German stocks (short), uranium miners (long), S&P 500 (short) and cryptocurrencies (long) at the time of writing.
(Photos: Pixabay.com.)
Paper gold is better