Where Does The Price Of Gold Go From Here?

Where Does The Price Of Gold Go From Here?

July 30, 2020  Economy Precious Metals

With the recent rise in precious metals prices to record levels in Dollar terms (in the case of Gold), many are wondering what is ahead.  Specifically, Gold’s previous record spot price in Dollar terms was reached on September 6, 2011, at $1,921.41. 

As you have likely heard, Gold went higher in nominal terms this week.  It is currently (at the time of this writing) at a spot price of $1,954.89, and has been fluctuating daily in an overall upward trend the last few years.  Some are calling this a speculative top, implying a correction is overdue. 

While decisions to sell are entirely personal and based upon individual circumstances, there are several conditions that support a continued rise in precious metals.  Mild corrections are normal, even in a climbing market.  It is my opinion that we are not likely seeing a peak now, but rather a period with new types of momentum, gathering steam for the years ahead.

Inflation Adjusted Prices Indicate Room to Run

Using the current government-defined method of calculating inflation, the previous record Gold price of $1,921.41 in 2011, would need to be $2,252.74 in 2020 adjusted for inflation.  In other words, the value of the Dollar has declined by 1.78% per year since 2011, meaning that Gold would need to reach $2,252.75 to set a new inflation-adjusted record high spot price. 

As we have written about previously, there continues to be a larger than normal difference between “spot” price, and the price to obtain actual metal.  Currently (at 7:51 AM on 7/29/20), the price to sell back a 1oz Gold Eagle (in good condition) is 1% higher than the spot price of $1,954.89.  This speaks to the continued demand for physical metal, regardless of the level of the spot price.

Silver also reached a high point in 2011 of $49.80, in the New York Spot Market.  Using the same inflation metric of 1.78%, the price would need to be $58.39 in 2020, adjusted for inflation. 

For Silver, the difference between spot price and metal acquisition price is even more pronounced than it is for Gold, on a percentage basis.  With the current “spot” price of Silver at $23.33, you can currently sell back a 1 oz Silver Eagle for 6% more than spot. 

To continue reading, please go to the original article here:

https://www.usgoldbureau.com/news/where-does-price-gold-go-from-here