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The price of gold hit an all-time high on Friday closing the day at just under $2090 per ounce. This is what analysts call a “breakout” from the previous high. The chart reveals when the price of gold surpasses a previous high a long-term bull market begins.
How high will the price of gold go before this bull market ends? No one knows for sure. But the gold price cycle provides us with clues as to the next top in the price of gold.
When President Nixon ended the last link between the dollar and gold on August 15, 1971, the official price of gold was $35 per ounce. For the next three years the price of gold traded in the free market and reached nearly $200 per ounce by the end of 1974, an approximately 6x increase.
Chart courtesy of StockCharts.com
From there the price dropped by 50% to $103 August 1976), a few months before the presidential election won by Jimmy Carter. The inflation of the Carter years propelled the price of the yellow metal to trade up to $850 in January 1980 as prices rose by double digits. Federal Reserve chairman, Paul Volcker, who was appointed by Carter a few months earlier, raised interest rates to more than 20 percent, crushing the rate of inflation and helping to usher in the boom of the 1980s and 1990s.
The price of gold bottomed at approximately $250 per ounce by 2002, ending a more than 20-year bear market. The stock market soared for 18 years beginning in August 1982 and the bull market ended with the dotcom crash of 2001.
The next gold bull market drove the price to just under $2000 per ounce 10 years later , an 8x increase. The price of gold then “corrected” to about $1050 at the end of 2016.
The price of gold then rose to an intermediate peak in early 2020 when the economy tanked because of the lockdowns during Covid and has been “marking time” ever since.
With the price of gold at an all-time high and given the trend of gold over the past five decades, the price of gold based on past cycles could reach a peak between $6,000 and $10,000 an ounce within a few years. My best “guess” is the price of gold will peak closer to $10K, because of the trillions of dollars that the federal government will add to the current $33 trillion national debt and the Federal Reserve’s probable purchase of Treasury securities, which would explode the money supply.
This is not a recommendation to buy, sell or hold. Use your own judgment based on economic, financial, and geopolitical factors that are and will be unfolding for the rest of the decade, which I will be monitoring here.