Gold Forecast: The Bull Market Is Just Getting Started
The comments below are an edited and abridged synopsis of an article by A.G. Thorson
The Fed almost made it a whole year without printing money; gold is set to outperform the S&P500 for several years; and the real bull market starts once gold breaks above $2,100.
The Fed seems to have an ever-expanding balance sheet. At the beginning of the financial crisis in 2008, it was $900 billion. Bernanke created QE, doubling total assets to $2.25 trillion. From 2008 to 2015, it jumped to $4.5 trillion. Through Covid, it soared to nearly $9 trillion. If it keeps doubling every seven years, total assets could reach $18 trillion by 2028, and $36 trillion by 2035.
With each crisis, the Fed changes the rules and saves the markets. In 2020 it purchased junk bonds, which broke its mandate. Now it is backstopping regional banks and almost guaranteeing all deposits. What’s next? We don’t know how this will end, but the US dollar could be the relief valve, and Fed may be dissolved.
When the gold/S&P500 trend is rising, gold outperforms stocks. When it is falling, stocks outperform gold. Gold bottomed out versus stocks in 2021, and the price should outperform significantly into 2031.
Gold soared to $2,080 during Covid and has been consolidating for over two years. We may not see a decisive breakout until July. The real bull market in gold will start when it breaks decisively above $2,100.
Gold could break above last year’s $2,078.80 high in the coming weeks. The headwind of higher interest rates has lessened; we may finally see a sustained uptrend.
The Fed will keep putting out spot fires as needed, but it won’t cut rates unless things get bad.
The bull market in gold will switch from the stealth phase to the more bullish secular phase in 2023 and 2024.