How High Can Gold Go?
The comments below are an edited and abridged synopsis of an article by First Macro Capital
When looking at gold as an investment, First Macro Capital determines how long past cycles lasted; how high it went; and where we are today. Ascertaining these three things help in being realistic on expectations.
How high did gold go? When we look at the price of gold over its past bull cycles, it gives an approximate sense as to how high gold will go in this current cycle. It also helps to determine reasonable entry levels, by appropriately determining expected multiples to earn on the investment.
The gold price has ranged between 5 to 25 times, but really the metric is between 5 to 10 times, because during the mid-1970s gold went through a bear market falling by more than 20%. This is why the 1970s can be broken up in terms of two bull markets, not one that most pay attention to.
How long will it last? It is critical to determine how long this next bull market could last, and where we are today in relation to these past cycles. Past cycles have shown the gold bull cycle has lasted from 800 to 3,200 trading days. Most of the move in price occurred in the second half of the cycle. This gold bull market is now the second-longest gold bull market, but will it beat out the last gold boom?
How high can gold go? The gold price hasn’t even gone up by 2X since the bottom of 2015, with upside in the price ranging from 5 to 9 times. This puts gold in the range of $4,000 to $10,000 from the low set in December 2015.
- The upside is in the range of 4-10X from the lows set in 2015, and gold has not even doubled yet!
- Taking a cycle approach, gold presents a proven strategy to buy, hold and create wealth over the next 3 to 5 years.
- Gold equities will provide greater leverage to investors.