Gold Price Forecast: New All-Time High!

Chief Analyst & Founder @ iGold Advisor
May 5, 2023

gold forecast

Following Wednesday’s Federal Reserve meeting and ¼ point interest rate hike, gold prices reached a new all-time record high: $2,079 in the spot market. This eclipses the previous record of $2,074 set in 2020 by $5 per ounce. While mainstream observers may not be paying attention to the message of the gold market, this new all-time high is a prelude for significantly higher prices to come. Gold is speaking loud and clear: there is trouble in the global economy.

Investors should be finalizing their precious metals portfolios now, because once gold has broken out to record territory, it will be too late to prudently enter the market. Investors seeking leverage to the gold price over the coming year should consider gold mining companies, which are significantly undervalued versus the metal itself.

Gold’s New All-Time High

By 8pm on Wednesday following the Federal Reserve meeting, gold prices surged to their new all-time record high: $2,079 per ounce.

Investors are now pricing in zero further interest rate hikes by the central bank; instead, interest rate cuts are being priced in, due to the string of recent bank failures.

From a present 5.0% on short-term interest rates, the market is pricing in cuts down to 3.0% by mid-2024. This prediction is in stark contrast to statements made by Fed chair Jerome Powell, who continues to claim that no interest rate cuts are planned for the coming year.

In essence, the market is calling the Fed’s bluff; and as central bank cutting of interest rates requires electronically-creating new money to buy short-term bonds (which is inflationary), gold prices are surging as investors seek protection.

Gold Charts Updated

Note below the new all-time high that was set on Wednesday of $2,079. While on the long-term chart it may appear that gold merely matched its 2020 peak, by zooming in we can see that gold actually eclipsed the prior figure by $5 to reach a new record high.

Gold zoomed-out and target:

Gold zoomed-in:

Gold’s Next Target

Although gold has thus far not closed above the former $2,074 all-time high, it has indeed registered a new record price intraday.

Triple tops generally do not exist in long-term market patterns; and thus, we strongly believe that following several more weeks of consolidation (i.e. “chipping away” at the last remaining sellers in the $2,074 region), gold will be ready to make daily and weekly closes in new record territory.

Following two successive weekly closes above the former all-time high, we will calculate an official target of $2,535 per ounce for gold, expected to be achieved within the next 6 – 18 months (green callout, top chart).

This target is calculated by measuring an amplitude of the entire three-year consolidation between 2020 – 2023 ($460), and adding this figure onto the breakout point. This type of analysis considers that as gold is making new record highs, an equal number of short-sellers and hedgers will be forced to cover their losing positions, which were initiated during the three-year consolidation.

Thus, the $2,535 target calculation.

Gold Miners for Gold Leverage

If gold breaks out and achieves its $2,535 target, it will represent roughly a 25% gain from the current level.

This will be a nice gain – but it won’t change many investors’ positions in life (unless they have $millions invested in bullion alone).

Fortunately for precious metals investors, there is a way to achieve leverage to the gold price: investing in gold mining companies.

For example:

  • If it takes Goldco. ABC $1,900 to mine each ounce of gold, and gold is currently trading at $2,000  then the miner profits $100 per ounce mined.

  • If gold advances from $2,000  $2,500 (a 25% gain), and it still costs Goldco. ABC $1,900 to mine each ounce, then the company now profits $600 per ounce.

  • We can thus see that as gold has gained 25% in value, the profits of Goldco. ABC have increased by 500% ($100  $600 per ounce mined).

  • This is the leverage that can be achieved in a rising gold price environment by gold mining companies.

Investors need to be very careful in selecting gold mining companies. While the right company can net an investor a new fortune, the wrong company can cause a disaster to one’s portfolio. Mining companies have a number of additional risks beyond bullion: geological risk, political risk, and financing risk, to name a few.

It is thus imperative that investors perform proper due diligence by selecting high-quality gold mining companies to achieve the type of leverage demonstrated in the example above.

At www.iGoldAdvisor.com, we perform independent research on gold mining companies that we are putting our own money into. In addition to open market purchases, we make highly-leveraged investments in mining companies via private placements, which offer us free warrants in addition to the shares. By investing via private placement, we can achieve even more leverage than in the example above.

Takeaway on Gold

The writing is on the wall – gold has just recorded a new all-time high record price!

The Metal of Kings will have a notably higher target over the coming year, once it solidifies its breakout.

Investors have little time left to prepare to capture the move ahead.

*********

Christopher Aaron began his career as an intelligence analyst for the CIA and Department of Defense. He served two tours to Afghanistan and Iraq between 2006 - 2009, conducting pattern-of-life mapping for military leaders.

Mapping shares similarities with technical analysis of the financial markets because both involve the interpretation of repeating patterns found in human nature. He is the founder of iGold Advisor, providing independent research and analytics on all aspects of the precious metals markets.

He speaks regularly on the cyclical patterns found within the financial markets and on international policy. He has been featured in the New York Times and NPR news amongst other financial publications.

www.iGoldAdvisor.com


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