"Everything you need to know about gold"
When the gold price declines or doesn’t go up according to expectations, analysts and investors begin looking for explanations. As the price drops further, claims are made that gold is undervalued.
Gold is not undervalued; and we might see further, larger price declines very soon.
LATEST GOLD CHARTS
When the gold price peaked at $2058 oz. in August 2020 it reflected a full ninety-nine percent loss in U.S. dollar purchasing power over the past century. The gold price has not been any higher since then.
The chart (source) below uses monthly average closing prices and shows gold price action for the past five years…
HOW MUCH IS GOLD WORTH?
Everyone has an opinion as to what something is worth, whether the object of consideration is their home, a late grandfather’s pocket watch, or a specific stock.
The price of a specific item or asset at any given time is a reflection of all those varying opinions.
RECESSION NOT GOOD FOR GOLD
Financial writers and gold bulls have both taken their turn at referring to a potential recession as having a positive impact on gold prices. The commentary varies somewhat, but here are a few examples…
“the price of gold would ‘benefit’ from a recession”; “the risk of recession will drive investors into gold”; “a confirmed recession is all gold needs to move higher.”
The statements above and others like them, stem from the assumption that bad economic news is good for gold. Further (they incorrectly assume), the worse the economy is, the higher the gold price.
An analysis of any profit potential in gold requires an understanding of gold and its fundamentals. The problem is that most folks do not understand gold or its fundamentals.
“Most folks” includes investors, traders, speculators, advisors, analysts, marketers, etc.
GOLD PRICE TARGETS
Almost everyone else continues to focus on the next upside leg for gold. In this article I will show some charts that allow for possible downside targets within the prevailing half-century uptrend.
There are four charts. I will provide some commentary after each chart. After that, I will add some final comments. The first chart follows…
ANALYSTS AT GOLDMAN SACHS CAN’T MAKE UP THEIR MINDS
Analysts at Goldman Sachs are now predicting that recession “will push gold to $2,500”. That is an increase of 32% from current levels.
How much confidence can one have in this latest proclamation? Not much; for several reasons.
There are three basic questions that need to be asked, and subsequently answered, regarding gold price manipulation. Here are the three questions:
GOLD GAINS IN PRICE ONLY
It has been said that the more things change, the more they remain the same. That is certainly true of gold prices.
Let’s look at the following three charts in succession. Then we’ll talk about them…