A few months ago we wrote in our blog that investors should consider $3,000 as an achievable price for gold this year. At the time, this seemed far-fetched and none of the experts were making similar predictions.
But things have changed a lot since then. Now most analysts and experts are predicting that gold will eventually reach that level. And why not? After all, it is only about 15% away from the $3,000 mark.
Once again, we will be the first! None of these experts are yet talking about the next price level - $3,500 per troy ounce. Is that unrealistic? Yes, it looks fantastic... just like our previous forecast a few months ago.
What are the reasons for this? The question can be broken down into two parts:
Let's assume that nothing significant changes in the world. Governments continue to print money, the war in Ukraine drags on, and either Biden or Trump wins the election, etc.
In this scenario, the uptrend continues. There is no sign of a slowdown. The reasons for this growth have been discussed in detail in our blog.
But the situation could take a completely different turn, and there are many possibilities that almost no one is considering.
We won't dwell on the possibility of military escalation in the Middle East or Ukraine. Anything can happen in either part of the world.
Instead, let's look at another seemingly fantastic scenario: the problem of the US national debt. It continues to grow rapidly, and servicing it (paying interest) is becoming increasingly expensive for the US budget.
At some point, this situation could spiral out of control, leading to a devaluation of the US dollar. This wouldn't be the usual 10-30% move against the euro, British pound or Japanese yen. We're talking about a devaluation that would drastically erode the value of dollar-denominated debt. This outcome would be in the interest of the US government.
Gold at $3,500? Absolutely not! In this case, $3,500 would be a dream scenario in the opposite sense. Investors will want to buy gold at that price, but who would sell it? With the devaluation of all dollar-based assets, the price of gold could soar. Resistance levels would disappear.
The world is changing rapidly. More and more events are happening that were unthinkable not so long ago. It's important to look beyond what the experts are saying - experts who are often stuck in yesterday's reality.
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