GOLD IN THE NEXT 5 YEARS: WILL IT RISE OR FALL
07 Jul 2022
In the past, people have flocked to gold as a safe haven asset during periods of economic instability and currency depreciation, making it likely that demand and price would rise over the next five years.
The fundamental factors that drive inflation are all present and accounted for, including supply chain problems, manufacturing concerns, a large amount of money from the Fed that hasn’t yet impacted the economy, and growing food costs. As a result, high inflation appears to have no end in sight. In contrast, the Fed’s modest interest rate increases of 0.50 and 0.75 basis points pale in comparison to the current inflation rate of 8.6 %, suggesting that inflation may become even more out of control.
The US inflation rate is at 8.6%, up from 8.3 % in April. High inflation rates in the past have caused the price of gold to rise quickly. Inflation was increasing quickly in the 1970s and up until 1980, and the price of gold increased by more than 2,000 %. The price of gold might rise sharply if inflation stays at or exceeds the target rate of 8%. To reach $3,000 an ounce, gold would only need to increase by around 50%; possibly as a result, gold will be considerably more valuable in 5 years.
- Stock Market Correction:
According to the Buffett Indicator, the stock market bubble that has already burst this year could have disastrous repercussions going forward since equities have never been as overvalued as they were. It seems conceivable that gold prices will rise if the stock market continues to correct or fall.
- Global Conflict/War:
A once-efficient international supply network may be further stressed as tensions on the planet increase. Based on historical statistics and key drivers of the value of precious metals, these factors would probably continue to propel gold upward.
Gold has historically done well during periods of international unrest and war. Since Russia invaded Ukraine, gold has been moving upward. The demand for defensive assets like gold is expected to increase swiftly if the crisis continues, which we hope it doesn’t, especially if it worsens and involves NATO neighbours. As a result, the price of gold can increase and eventually approach $3,000 per ounce.
- US Public Debt:
The total public debt of the US is getting close to $30 trillion. Now, this astounding sum exceeds the US’s current GDP by 150 %. The dollar’s purchasing power and international confidence are being undermined by record federal deficits and rising inflation, which could jeopardise the dollar’s position as the world’s reserve currency and cause the currency to crash if nations and businesses decide to switch to a better alternative.
Gold 5-Year Forecast – (What to expect from Gold In the next 5 Years):
In the next five years, gold’s price might increase from its present level to as high as $3000 due to galloping inflation and the mounting US debt. The price of gold might reach $4000 per ounce if money printing increases due to the US debt spiralling out of control. Gold’s price might increase to $5000 per ounce in just 5 years if there is a severe market crisis.