Most investors are still positive and optimistic in their gold forecasts. However, investors are wondering when higher prices will come. In general, higher price expectations are on the north side of $2,000, sometimes much further north, says finance expert Kelsey Williams. The master’s gold analysis and market evaluations with his own expression cryptocoin.com We have prepared for our readers.
Long-term analysis of gold prices
Looking at the long-term chart of gold prices, it is reassuring to see higher prices progress over time. Check out the chart below, which reflects gold prices over the last fifty years.
During this time, the price of gold has been in a continuous uptrend from $36 and currently the price is more than $1,800. Below is the same price chart, adjusted for the effects of inflation. So, the uptrend is not that clear and obvious.
In fact, the pattern is significantly distorted; Instead of a single clear uptrend, there are two ten-year periods of rising prices separated by a twenty-year period of decreasing prices. After a peak in 2011, the price of gold fell for five years before hitting a third peak in 2020. All three gold price peaks (1980, 2011, 2020) are shown in the chart below.
All the major turning points in the gold price before 2020 (1933, 1971, 1980, 2000, 2011) coincide with the major turning points in the US dollar. Gold is priced in US dollars, and as the US dollar is constantly in decline, the price of gold will continue to rise over time.
However, there are periodic changes in US dollar valuations, and these changes can last for years, as in the 1980-2000 and 2011-2016 periods. During these periods, the price of gold may drop significantly.
Evaluation of gold price with inflation
The gold price is constantly changing. Over the last fifty years, it has generally increased steadily. However, the effects of inflation on the US dollar are volatile and unpredictable. The dollar’s loss in purchasing power has been unusually subtle at times. During these periods, the price of gold does not do much, even falls.
The falls can be quite steep and can last for years. We have already mentioned the decline of gold between 1980-2000. The real numbers are pretty heartwarming. After twenty years of working, the price of gold has dropped another sixty-three percent ($250) from the average closing price of $678 in January 1980.
As noted, the decline is bad enough, but continued erosion from the effects of inflation has exacerbated the damage. On an inflation-adjusted basis, the decline was more than eighty percent (83.3%). He is also a long-term investor who owns gold at $678. It had to wait 31 years (2011), to get close to the breakeven point in January 1980.
What is interesting here is that even after waiting forty years, the peak of gold in August 2020 still has not exceeded the 1980 peak, adjusted for inflation. The numbers are even worse now. For a 1980 peak of $678, today’s equivalent gold price is $2,450. With gold currently at $1,890, its price is 24% cheaper than it was in January 1980.
“Right now it’s pointless to expect more from gold”
The value of gold is in its use as money. This value is continuous and constant. The price of gold is rising to reflect the loss in the purchasing power of the US dollar, nothing more. Most investors below are not actually investors at all. They are traders. Traders have short-term, impatient and unrealistic expectations; especially if these things are about gold.
The problem with those who still believe that gold is an investment is that time is not on their side. The gold price has been rising lately. It does this to reflect the effects of inflation already occurring and registered in the economy. When the precious metal price peaked in 2020, it reflected a complete 99% decline in the purchasing power of the US dollar over the past century. It’s pointless to expect more from gold right now.
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