from Birch Gold Group:
This week, Your News to Know rounds up the latest top stories involving precious metals and the overall economy. Stories include: Gold dazzles for another week as it passes $2,150 again, what we’ve learned about why gold is going up, and what it’s like to be a Chinese gold consumer right now.
Gold passes $2,150 again and 2024 price targets rise
Another week of sitting back and seeing how far analysts are willing to push today’s gold price predictions for the year. We were here last week at $2,080, and $2,150 is the latest pit stop in the race to $3,000. Right now, sky-high forecasts are abundant.
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Following a run that left it at a new all-time high of $2,195, gold spent the better part of the last week seeing how low the bouncing back point is. Pretty high, it would seem, as it remains near the mentioned level, currently above $2,160 as I type. (Will we ever see gold below $2,000/oz again?)
So analysts are busy revising their forecasts. Goldman Sachs updated their annual average forecast from $2,090 to $2,180 (a 4.3% increase). Clearly, they are expecting considerably elevated prices. A quick look at some of what other top firms are saying shows us why.
Morgan Stanley upgraded their forecast for this year to $2,300. Their team mentioned how central bank buying is negating any profit-taking that might otherwise push gold prices down, and expect this (combined with demand from individual investors) will keep pushing gold higher.
JP Morgan claims that’s just plain too low. JPM analysts see gold going all the way to $2,500 this year, with surprisingly moderate conditions required. In short, gold needs more of the same in terms of inflation and jobs and other economic numbers (which will inevitably return central banks to interest rate reduction and its attendant risks).
Every time a price goes up, you hear voices warning that it will go back down. However, the number of upgraded forecasts anticipating higher prices vastly outweigh the skeptical voices. Instead, the voices predicting a correction in gold’s price seem to think that must happen in order to achieve economic business-as-usual. But that’s what gold is there for! At least for long-term investors (as opposed to speculators), for many, gold is what we own when we’re concerned about a departure from the economic status quo.
Perhaps the most savvy gold owners don’t concern themselves so much with why gold’s price is going up. Prices fluctuate, day to day, week to week – and it’s probably a mistake to overfocus on short-term movements when the real story is that of a long-term, lasting upward trend.
One-year price targets are nice. But honestly I care a lot more about what gold’s price will be in five or ten years.
Everyone’s admitting gold’s price surge is “unprecedented”
For most assets, it might not be “economically correct” to say that they’ve risen for reasons you can’t explain. Such an admission implies excessive pricing – if you can’t understand it, maybe there’s no there there? But in the case of gold, just about everyone is saying they aren’t sure what’s going on. Gold’s price keeps rising and they aren’t sure why.
That is the beauty of the yellow metal’s fundamentals. Analysts can question price jumps without really making it sound as if they’re questioning the price itself. See, that’s the problem – analysts can’t directly talk about a high gold price without also discussing the forces that generally drive gold higher. You know, things like:
- Inflation, rising prices and currency debasement
- Geopolitical uncertainty
- Economic instability
It’s becoming mainstream to admit that this surge in gold’s price isn’t like the others. There’s no single black swan or crisis to point to, no simple story. This immediately suggests that something has gone wrong with the domestic economy, more specifically with the U.S. dollar.
