Gold to US$15,000 in this cycle?

Key Concepts

• Gold Bull Markets: Periods of sustained price increases for gold.
• Historical Gold Returns: Analysis of gold's performance during past bull markets.
• Price Targets: Projections for future gold prices based on historical data and market conditions.
• Interest Rate Hikes: A key trigger for the start of the current gold bull market.

Analysis of Past Gold Bull Markets and Future Price Projections

This section delves into the historical performance of gold during significant bull markets and extrapolates these trends to project future price targets.

1. Historical Performance of Gold:

• Anecdotal Evidence: The speaker references an anecdote concerning the average return of gold during the last two major bull markets.
• Identified Bull Markets: These are identified as the bull market of the 1970s and the bull market spanning from 1999 to 2011.
• Average Return: Over these two identified bull markets, gold experienced an average return of approximately 15 times (15x) its initial value.

2. The Current Gold Bull Market:

• Start Date: The current bull market is considered to have begun in January 2016.
• Trigger Event: This commencement coincided with the first interest rate hike in years, which marked the bottom in gold prices.
• Bottom Price: The price of gold at this bottom was approximately $1,044-$1,045.

3. Logical Price Target Calculation:

• Methodology: The speaker proposes a logical price target by applying the average historical return (15x) from the previous two bull markets to the starting price of the current bull market.
• Calculation: $1,045 (starting price) * 15 (average return) = $15,675.
• Rounded Target: This calculation leads to a logical price target of around $15,000 for gold.

4. Addressing Skepticism and Future Outlook:

• Perceived Outlandishness: The speaker acknowledges that a $15,000 gold price may seem "outlandish" at present.
• Historical Precedent for High Prices: However, they counter this by noting that a $4,000 gold price also seemed outlandish just two years prior to the current discussion.
• Confidence in Target: The speaker expresses a belief that, "in the fullness of time," the $15,000 price target for gold is "likely to be achieved."

Conclusion

The analysis presented suggests that based on the historical performance of gold during its last two major bull markets, which saw an average return of 15x, the current bull market, initiated in January 2016 at approximately $1,045, could logically reach a price target of around $15,000. While this figure may appear high, the speaker posits that historical precedents indicate that such price levels, once considered improbable, can indeed be attained over time.