$2,500 Gold – Buy? Sell? Hold? What should I do??
Gold is in the process of establishing a new base at $2,500. Much as when gold fought to establish a base earlier this year at $2,000, and traded above and below for a period, we now see the same thing at $2,500. If I am an investor, what should I do? Let us take a look at the charts first:
1 Year Chart
Above is the 1-year chart of gold (gold-color line and price of gold on the right side) and the S&P (black line and price on the left side). I drew the blue line from start of the period to today. As you can see, gold has both underperformed and overperformed the S&P in the last 12 months. Gold is currently out-performing the S&P on a 1-year basis. The trend is definitively up.
5 Year Chart
Above is the 5-year chart of gold, the S&P (black line) and percentage increases for both on the left-hand side of the chart. The red line is the simple moving average of the gold price.
Gold was pretty flat from 2021 to 2023, but has since accelerated upward, now outperforming the S&P on the 5-year time frame. Are you surprised?
Personally, I was calling for $2,500 by the end of this year, not as early as this past August. Where will gold end in 2024? I do not know, but what I do know is that gold is going higher. Ask yourself, “what would cause gold to decline?
Declining sovereign debt?
Declining deficits?
Decreased geopolitical tensions?
No future monetary stimulus?
BRICS’s abandoned
Petrodollar reinstated?
Bottom line, everything that drives gold higher will remain in place. I predict we will easily see gold at $3,000 in twelve months and very possibly $3,500 by end of 2025.
Finally, I hear “gold is too expensive” all the time. Please consider this: The gold price never really changes. Rather, the denominator (the U.S. dollar) continues to decline in value. It just takes more of increasingly less valuable fiat currency to purchase an ounce of gold, which doesn’t change.
“Gold is a treasure, and he who possesses it does all he wishes to in this world.” – Christopher Columbus
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