“There seems to be an almost fanatical obsession with ‘fortune telling’ when it comes to financial markets,” said Kelsey Williams, a financial markets expert, noting that gold is no exception. Taking a look at some of the earlier forecasts to help put things into perspective, Kelsey Williams’ self-explanatory market comments and forecasts for gold prices cryptocoin.com We have prepared for our readers.
Evaluation through case studies
$6,000 estimate for gold
Excerpt from the article: ‘If the current gold bull market were to follow the timing and extent of the 70s bull market, the gold price would have reached $6,000 before 2014.’ On the day the article was printed, gold prices were $1,679. In March 2014, the price of gold dropped to $1,382, and by the end of 2014, gold was priced at $1,181.
How far from the base can a price estimate be? Not only did gold hit the target price, it went in the opposite direction starting the same month and fell 30% over the next two years, ending at $1,205 on December 31, 2014. The problem isn’t the plausibility of $6,000 gold. It is both reasonable and possible. However, the forecast was particularly time-oriented and horribly misjudged in terms of timing and direction.
JPMorgan’s $1,800 estimate
Quote: “JPMorgan sees gold at $1,800 by mid-2013. JP Morgan Chase & Co. said that, along with the mining industry, gold will rise to $1,800 by mid-2013.” At the time the headline was published, the price of gold was $1,667. Five months later, on June 29, 2013, the price of gold was $1,233.
JPMorgan’s estimate of $1,800.00 in gold was a ‘safe’ estimate. Just an 8% increase from the current (then) $1,667 level would have been enough for the gold price to reach $1,800. However, as in the previous example, the price went south with a vengeance. In this case, the price of gold fell 26% in five short months.
How realistic are the forecasts for gold prices?
Gold, stocks, real estate, etc. The time periods that we evaluate and focus on in terms of analysis and investment have become increasingly short-term. In fact, financial markets seem to be more characteristic of casino-type activity. Investment has become speculation. In addition, volatility is increasing exponentially. Sometimes, with products like leveraged ETFs, options on futures, and more, it seems more like a bullshit than a basic investment.
Do not misunderstand me. I am not against speculation. Speculators serve the markets well and provide liquidity that would not otherwise be there. Their role is critical to the regular function of markets. Without speculators, things would always be worse. But the nature of financial markets has changed radically and investors need to accept this reality. The most serious concern regarding the orderly functioning of today’s financial markets is systemic risk. This applies worldwide and no country or market is immune.
With these in mind, can anyone really make predictions with any degree of reliability or accuracy? I do not think so. And forecasts traditionally seem overly conservative given the explosive (and explosive) nature of markets; or they just tend to be ridiculous.
Current success potential for gold prices
The average monthly closing price for gold in July 2020 was $1,971. The following month gold hit an intraday high of $2,058. Due to the additional loss in US dollar purchasing power since then, the inflation-adjusted gold price peak for August 2020 is now $2,114.
At $1,820 for gold prices, the current upside potential is limited to around $290 ($2,114 – $1,820), or 16%. On the other hand, the risk-reward ratio is unfavorable for long-side bets, with gold potentially downside between $1,375-1,400 in the near term.
Advice from the expert for 2022
A suggestion to the golden ‘swamis’: How about new decisions instead of more guesses? Some possibilities may include:
- Be determined to see gold as it is (real money; not an investment.)
- Study and learn the history of gold as money.
- Stop expecting gold to be the “next big thing”.
- Lower your unrealistic expectations.
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