Focusing on gold price predictions is frustrating at times. The more sensational and spectacular the price forecast, the greater the noise.
It is worthwhile to take a look at some of these predictions to help keep things in perspective.
Title: Gold Forecast $ 6000, and Gold Mining Analysis by Visualization 23 January 2012
Quote: “If the current gold bull market follows the bull market time and limits of the 70’s, the gold price will reach 000 6000 before 2014. “
Gold price on January 23, 2012: $ 1679.00 per oz.
Gold price on March 14, 2014: $ 1382.00 per oz.
Gold price on 31st December 2014: $ 1181.00 per oz.
How far can the basis of a price prediction be? Not only has gold reached its target price, it has moved in the opposite direction – starting the same month – and is set to decline by 30 percent over the next two years, ending at $ 1205.00 an ounce on December 31, 2013.
Problem $ 6000.00 Gold is not rational. It is very reasonable, and possible; Probably even probably. However, the prediction was particularly time-based and was terribly misleading in terms of direction and time.
All of that is forgivable. Unless you own a subscription service and / or do not recommend investing to others, or provide trading advice.
Title: JPMorgan forecast gold at $ 1,800 in mid-2013 01 February 2013
Quotes:“JPMorgan saw gold in mid-2013 as a “crisis” in South Africa and “increasing instability” in the Middle East.“
Gold price was $ 1667.00 per ounce on the date the title appeared. Five months later, on June 29, 2013, the price of gold was $ 1233.00 per ounce.
The call for $ 1800.00 gold was a ‘safe’ forecast. An increase of only eight per cent from the existing (then) level of 67 1667.00 will result in gold price of $ 1800.00.
But, as in the previous example, the price has gone south with revenge; This time it has dropped 26 percent in five short months.
Title: Trump won the $ 1,500 signal Gold … 10 November 2016
Quote: “A Trump indicates US $ 1,500 per ounce for gold in the US presidential election … in the medium term.”
Gold price on 10 November 2016: $ 1258.00 per oz.
Gold price on 31st July 2017: $ 1268.00 per oz.
Apparently gold did not see the ‘signal’ because its current price is almost the same as the price of the day when the forecast was published just after the November election.
And what does the author mean by “intermediate term”? The higher the time frame, the lower the value in the prediction. The expected dollar growth rate is twenty percent. If it takes two years, it is about ten percent annually. In that case – or if it takes more than two years – is it worth the bold-faced title?
Title: Trump will send the price of gold to 10,000 10 November 2016
The price and date of gold are the same as in the example above. When can we expect some progress in the price target where gold was ten months ago?
Further foreign exchange forecasting usually focuses on the breakdown or collapse of the monetary system. The breakdown was caused by the complete rejection of the US dollar after decades of depreciation. People simply refuse to accept and hold US dollars in exchange for their products and services.
Now suppose you own gold at that time. Will you sell it? At what price? For how many worthless US dollars would you part with one ounce of gold?
If someone offered you one billion exclusive dollars for an ounce of gold today, would you take it? How about ten billion?
Okay, so what if we see a sharp fall in the value of the US dollar over the next few years? Let’s say the fall amounts to a loss of 50 percent purchasing power for the dollar from current levels. This would be equivalent to the approximately 00 2500.00 gold price per ounce, double the current level.
This is valid if gold and the US dollar are currently in balance (I think they are). In other words, the current price of gold at 50 1250/60 is an accurate reflection of the increasing depreciation of the US dollar since 1913.
Fifty percent reduction in the purchasing power of the US dollar will be reflected in the higher prices of other products and services; A pattern that has become very familiar over the last hundred years.
If there is a viable market, and you assume you sell some gold and make a profit, how much will it cost to decide what you want to buy? Do you really think that you will be able to buy other items at ‘discounted’ prices at that time?
In 1913 the price of gold was $ 20.00 per ounce. At present it is 60 1260.00 per ounce. Which increases more than sixty times. But it does not represent any gain. Because the general price level of today’s goods and services – in general – is sixty times higher than in 1913.
There are times when you can benefit from gold sharp rice in short-term situations. In general, this is just before the big change in the value of the US dollar, which reflects the perceived decline in the purchasing power of the dollar. And, to a lesser extent, it acknowledges when the expectations of others push the price of gold out of balance against the US dollar.
In 1999/2000 the price of gold dropped to -2 250-275.00 per ounce. It soon began a decade-long race in 2011 with a maximum price of $ 1900.00 per ounce.
After its peak in 2011, gold fell to a low of $ 1000.00 per ounce over the next five years. A short-term rebound in early 2016 brought it back to its current level ($ 1250-1350.00) where it usually does not break above or below any significant level.
Where were all these ‘experts’ in 1999/2000 and what were they predicting then?
And since 2011/2012? They have been saying the same thing over and over again. Why now! Buy more! Before it’s too late!
One day, it will be too late. However, the issue of financial survival is much higher now than before. Profit obsession, prediction and trading have obscured the real fundamentals.
And one way or another, most people’s profits can go up in smoke before they do anything meaningful.
Gold – Physical Gold – Real Money. It makes real sense because it is a treasure trove of value. And its value is constant. The value of the US dollar continues to decline over time. The steadily declining value of the US dollar and the perception of the people about it, as well as their expectations of it, determine the price of gold.