Gold has been making a quiet run these last four years while yesterday it crossed $1,800 per ounce for the first time since September 2011.
Gold’s cycle low was a little above $1,000 in December of 2015 so it’s gained almost 80% over the last 4 1/2 years!
The difference between today and September 2011 when gold hit an all-time record high of around $1,900 per ounce is that it’s been a much stealthier move this time around. What I mean is that back in 2011 everyone was talking about gold constantly whereas I don’t hear nearly as many pundits, or retail investors, talking about it today. This tells me that gold will probably set new record highs again as there may be more untapped fuel waiting in reserve. Typically, an asset tops out when EVERYONE is talking about it (remember Bitcoin?), and it just doesn’t feel like that same dynamic exists yet at this point.
Obviously, there will be a ton of volatility in the gold price as there always is, but I will not be surprised to see gold easily exceed it’s prior record over the next 5-10 years. I believe the moment gold really takes off is once the market realizes the Fed will need to continue printing money at an unprecedented scale to monetize massive government debts and support markets. However, note, this could be after a brief period of deflation first, which would typically be an adverse environment for gold in the interim.
This is why I’ve maintained, and continue to maintain, precious metals and gold miners in portfolios to compliment more traditional bond and stocks assets these last few years.
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