Gold prices have remarkably increased by 5 percent after hitting a fresh 3-month-low in mid-May. Gold, unlike silver, is usually driven by supply and demand and is often driven only by monetary factors. Wall Street says gold is just like oil or corn or other commodities, even though up to 20 percent of mined gold is held by central banks globally. Considering the current goings-on in the economy is essential when talking about gold’s prospects.
Gold Alliance, a gold IRA company, has made gold price predictions for next 5 and 10 years, respectively. By forecasting the bullish future for the price of gold, investors can make quick decisions on what step to take or do to mitigate investment risk while ensuring an incredibly stable store of wealth.
Factors to consider when looking at gold prices in the next 5 to 10 years
Before considering these factors, here’s a brief look at the bull market from the ’70s to the ’80s:
● Bull market: 1970 to 1980
The price of gold had a bull run during this period, reaching above 1,500 percent. It rose from approximately $30 to more than $500 per ounce.
● Bull market: 2000 to 2010
During this period, gold prices increased from $280 to $1,420, i.e., a 600 per cent move.
● Bull market: 2020 to present day
The beginning of 2020 saw the price of gold set at approximately $1,500 per ounce. The current price of this commodity is $1,856.46 per ounce. This is an approximated 30 percent move just within the last two years.
Therefore, based on the previous bull markets, especially the last two, the price of gold could easily surge to more than 1,000 per cent within the next ten years. This surge will ultimately put the price of this commodity at a jaw-dropping $18,000 per ounce by the time the 2030s roll by.
Therefore, aside from market cycles, the following considerations will be at the top of the list when you look at the price of gold over the next ten years:
● United States recession
Several economic and financial specialists decree that the United States may plummet into another recession. Only a few people will forget the recession that followed the housing collapse that occurred in 2008.
As the entire world awaits the possibility of these predictions, the price of gold may very well rise more than expected, especially when the significant demand for the highly defensive yellow precious metal rises. But then, this is not the only period in which gold prices rose significantly after a recession.
Historically, gold prices per troy ounce frequently rise during or immediately after a recession. There was a period, i.e., in 1971, when the government locked in gold prices, preventing them from rising. The financial markets did not determine gold prices during this period.
● Central banks
The highest level of gold that the central banks held in 2021 was up to 32,000 tons. According to a World Global Council report, this was an enormous amount of gold, the highest ever held since 1990.
The World Gold Council associates the switch of central banks to gold with the significant decline of the dollar, which was caused for the most part by the massive money printing of the United States’ central bank.
The considerable demand for gold originates from multiple sources. Some individuals purchase precious metals to protect their buying power in uncertain times adequately.
Even so, the price of gold could be severely affected by other sources. For instance, central banks substantially increased their gold reserves over the past decade. As fiat currencies get weaker per diem, central banks will likely purchase more gold. This could significantly push gold prices per ounce over the next ten years.
Based on history, it won’t be unreasonable to state that central banks only seek to buy more gold because this precious metal is predominantly free from counterparty risk, unlike the dollar.
This means that considering gold as an investment is in excellent order since the precious metal is far less affected by the violent disturbance in the economy and within the financial markets compared to other vital assets.
● Historical trends
The farther you go regarding predictions, the more challenging it becomes. Utilising historical and long-term trends, it is somewhat easier to put together possible/potential market cycles and then combine them to generate future events.
History shows that the bull and bear market cycles of precious metals last between ten to twenty years. This is why it is possible to predict how gold prices may change over the next ten years, based primarily on prevailing global/economic events and their impacts on the financial markets.
The bullish markets of gold have been experienced over the past two years, making an approximate 30 per cent move within this period. According to Gold Alliance, a reliable gold IRA company, gold is likely to continue along with this trend.
This could set gold prices at about $18,000 per ounce by the time the 2030s arrive. However, these forecasts are primarily based on the events currently occurring in the global economy as well as the financial markets.
Gold is used extensively in several industrial applications. This implies that as the demand for these products increases or goes up, the demand for the precious yellow metal – and of course, the price – will most likely go up.