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What’s The Long Term Gold Price Forecast?

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Guy looking through binoculars

Can you see into the future what the price of gold will be?

Wouldn’t it be nice to know where the price of gold will be in say, 15 years? It would be much easier to decide if investing in gold was for you if you knew exactly what your return on investment would be right?

Well of course gold investing, and any investing for that matter, is not that easy. So how can we try to tackle the question about what’s the long term gold price forecast?

First off I want to say that it is almost impossible to be right on this question. There is so many variables that plays a role and trying to predict the exact price of gold is an impossible task.

With that said there is one major point that I want to make with this article. It is that the future price of gold is almost completely dependent on the future value of the dollar, because gold is priced in dollars.

The future price of gold is dependent on the future value of the dollar

So what do I mean by this? It’s actually fairly simple. One of the major fundamental things that are driving the price of gold higher is inflation.

I hope, and think, that it has been impossible for you to not realize how fast prices for goods and services are going up nowadays. Take the grocery store for example. How much more groceries did a $100 bill get you say 10 years ago compared to now?

How much more gas could you buy for $20 ten years ago compared to now? Everything that we keep buying is going up in price every second of every day. The reason why? Because our government and banks keep printing much more money so that the value of the dollar is going down.

I like the analogy of a hockey card (because I love hockey), but you can think of any other sports card. As you know there are certain cards that are valued more then others by us. As an example if you traded cards with somebody maybe you wanted 3 of his cards for one of yours.

So what is it that makes a card more valuable than others?

It’s how many of those cards are in circulation. If everyone have a specific card and there is lots of them floating around, that card wont be worth as much right? The most valuable card is one that there is only one copy of in the entire world.

If someone started to print more and more of this valuable card (so there are more in circulation) the value of the card would drop, right? Because now everyone have this card and there is nothing rare and exciting about it anymore.

The exact same thing goes for our money. Think of the dollar as this valuable hockey card. It is valuable because there is not that many of them. When then our central banks keep printing more and more of these dollars the value of one goes down just like the hockey card.

Gold price going up and dollar going down.

The further down the dollar goes the higher up the gold will go.

As another example lets look at house prices. The price of an average home has went up in price a lot in the past 20 years. Why is that? I mean it is still the same house as it was 20 years ago? If anything it should have gone down right? Because for example the door is now 20 years old and not brand new.

What is happening is that the value of the dollar is getting systematically destroyed by our central banks, that is why the price of the house goes up. The value of the house is still the same, I mean it’s the same house. But because there is more paper dollars out there chasing the same house the price of it gets artificially pumped up.

Take a look at the chart below. It’s the value of the dollar and as you can see it has lost around 95% of it’s value since 1913 when the federal reserve was created. Think of it like this: you get 95% less stuff (food, gas, houses etc) for a dollar today then you did in 1913.

The value of the dollar dropping 95%

Because our central banks keep printing more and more money the dollar has lost 95% of it’s value since 1913.

So what does this have to do with the gold price forecast you might think? Well gold is exactly the same in a way as a house or the food. The major driver of the price is inflation. The more money our central banks print, the higher the price (in dollars) an ounce of gold will be.

That is why when people ask me how much the gold price will be in say 15 years I just ask them. How much more money will our central banks print?

Because gold can be worth $10,000,000 in 15 years. But then maybe a cup of coffee costs $50,000. The reason why is because the central banks have printed so much money that we have gotten an inflation that is out of control that just keep pushing the price of everything through the roof, especially gold.

So how much money will the central banks print?

That is a tougher question. But right now it looks like the only thing that they can do to keep this economic system going is to print more and more money every second of every day. To go deeper and deeper into debt to be able to pay their bills.

I mean if printing money actually worked why doesn’t the central bank print $1,000,000 for each citizen so they can go out and spend it? Imagine if you got $1,000,000 today that you could spend. That would be nice wouldn’t it? Well of course it doesn’t work like that and printing money to pay your debt has never worked throughout history and it won’t work this time either.

Have a look at the chart below. This is the US monetary base. So it’s the amount of all the dollars printed since 1985. As you can see they are printing more and more money (paper) every day.

Look at the craziness after the 2008 financial crisis. This is when the US central bank did the bank bailouts and all the Quantitative Easing. Do you think this can go on for ever? To just print more money to keep the system going?

And even if you do, I hope that with this article you have realized that the more money they print the higher the price of gold will go.

US monetary base

The total amount of US dollars in circulation. See how they are printing money like it’s going out of style? Do you think this can last for ever?

Final Thoughts

I hope that this article showed you that the future price of gold completely depends on how much money our central banks will print. The more money they print, the higher the price of gold will be.

That is why I don’t like to put a dollar value on gold for the future because it doesn’t make sense. An ounce of gold in Weimar Republic (old Germany) went from a 100 marks (Germany’s equivalence of a dollar) in 1922 to 1,000,000,000,000 marks in 1924 during their hyperinflation.

At 1922 a loaf of bread was 163 marks and by the end of the hyperinflation in 1924 it was 200,000,000,000 marks.

So the price is pointless to know. What you want to know is the value of gold. How much rice does one ounce of gold gets you? How many ounces of gold to buy a house? a car? Whats relevant is the ratio between gold and other products. Because as I said, gold can be $1,000,000 for one ounce but a cup of coffee then is $50,000. That way gold haven’t risen in value, just in price.

If you think that the US will keep printing more and more money to go deeper and deeper into debt then it should be a very logical conclusion that the price of gold will go up. How much will it go up? Well, how much money will they print?

My top 3 reasons for why you should invest in physical gold today.

Why Should You Invest In Gold?


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11 Comments

  1. Hi Marcus, I really enjoyed this post. You are able to paint a very detailed yet simplistic picture of inflation and the pricing of goods and gold. It is truly shocking how the government just keeps printing money and thinks it will solve the problem- pure craziness! You made a concept that is difficult to comprehend very easy to understand, well done!

    • Thank you Maggie.

      Yeah our financial “experts” wants to keep everything so complicated. I think they might not want the public to know the truth. If people really knew what the government is doing to our currency there would be a lot more people calling out the BS.

      Hopefully by keeping it simple we can get more and more people to understand that printing more and more money will have devastating long term effects and gold is the asset to be in if you want to protect yourself from that.

      Marcus

  2. I follow you here. It’s difficult to predict the future. I like to buy gold when the stock market is high and sell it when it is down. Hold on tight for the wild ride.

    • Thanks Tony.

      Yeah I agree with you. Your portfolio should not consist of only gold because it doesn’t have a yield. But when the financial system is as shaky as it is today it is very risky to be in the stock market. Feels like a 2008 event can happen any day.

      I think your making the right decision in holding on to the gold until the stock market goes down (crashes). Then you can sell the gold and move into the stock market and follow the rally up again.

      Thanks for reading.
      Marcus

  3. I don’t agree that gold is priced in dollars. Gold isn’t attached to any currency. It’s a commodity, like oil, corn, etc that has a value that people agree on. Gold has a “price” in every currency that is affected by world events, various economies and market manipulation.

    Gold historically, has held its purchasing power and is a store of wealth. Back in the 1930s, 1 oz of gold would buy you a very nice suit. So would $35. Today, 1 oz of gold will still buy a very nice suit. But $35 buys you a few cups of coffee. Gold’s inherent value hasn’t changed. But the currencies it’s valued against have been debased and devalued over the decades. Gold maintains your purchasing power while the value of your currency (USD, EUR, GBP, YEN, etc) keeps on heading to zero.

    But I definitely agree that putting some of your savings into gold is a smart thing to do and I agree with your sentiments in your “Final Thoughts” about the value of gold in relation to other goods being what’s important.

    • Hi Daryl, thanks for reading.

      Yeah I agree with everything you say. But how it is today is that our assets are priced in dollars. You don’t go to the grocery store and pay for your groceries with a barrel of oil. I think we agree exactly on the issues and the strength about gold. What I’m trying to say, like in the final thoughts, is that the more money our government prints the higher the price of gold will be in dollars, euro, pounds or yen.

      But the true thing is the value which I tried to discuss a bit. It’s how much goods and services you can buy with an ounce of gold that is the important thing.

      Did you know that in the Roman Empire you could by the “suit of the day” for one ounce of gold as well? So basically gold has held it’s purchasing power in regards to suits for around 2000 years. Probably longer if we had more data on it.

      Thanks a lot for the read.
      Marcus

  4. These are some shocking statistics for me! The value of the dollar is just pathetic.

    This is more reason why I should be investing in gold as soon as possible. I think that the federal government will keep printing more and more dollars because of the current situation in the US.

    It is very disturbing that this is happening, no wonder why Peter Schiff says “We’re on a collision course for disaster. All we can do…is brace yourself for impact by buying gold.”

    This is a true eye-opener that I hope many other people will get to read.

    History has shown us what inflation can do to the prices of goods. We should learn from the 1922-1924 Weimar Republic lesson.

    Gold is the surely the way to go for sure.

    Thank you for sharing this Marcus.

    Best,
    Jason.

    • Thank you Jason.

      Really appreciate the good feedback. My goals are always to try and talk about the economy and gold in an as easy to understand way as possible. Lots of people wants to make it complicated but the facts are: It never has, and never will, work to just print more and more money. The only thing that will happen if you print more money is asset prices will be inflated.

      And you run a big risk of getting inflation to run out of control and a hyper inflation like Weimar Republic is what you get. The great thing about gold is that it’s yours. It’s outside of the financial system and it can’t be taken, it can’t evaporate and it can’t be hacked.

      Because right now we don’t even have that much “paper” money. Most of our money is in the digital form. You have a balance on your bank in 1’s and 0’s. There is a huge risk with this and your wealth can disappear over night.

      Hold gold and protect yourself for the coming economic crash. Let me know if there is anything I can help you with when investing in gold. Send me an email at marcus@whyphysicalgold.com and I will gladly help you.

      Thanks for the read,
      Marcus

  5. I like your clear explanation about dollar vs gold. Even though money matter is one of the most complicated thing to explain and forecast in real life. This is because dollar is controlled by so many factors and forces. Its something that even the great economists find difficult to forecast. You are right, if every American has $1,000,000, then the dollar will be worthless. What drives the dollar is demand and supply.

    • Thank you for the comment Kevin. Yeah forecasts are not easy but I’m trying to put it in as simple terms as possible. I do not believe that economic forecasts have to be so hard. It’s just common sense that it’s not sustainable to keep borrowing more and more money indefinitely. Sooner or later you can’t borrow more money. That’s when the dollar will collapse and people will realize that the US is bankrupt.

      I do agree with you that the supply and demand drives the dollar. And we keep on increasing the supply and the demand for dollars globally is getting less and less. You see countries like China and Russia doing everything in their power to not have to settle international debt in dollars.

      With a higher supply and less demand the price will go down. Even for the dollar. So the value of the dollar will keep going down just like it has been doing for the past 90 years. It will go down until it can’t go down anymore because it’s worthless.

      Thanks for the read

      Marcus

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