Predicting the future of gold is a fool’s game

People always have something to say about gold or where it is going as an investment asset. These are usually spectacular claims but some of the opinions that you will come across have already been saying and are just regurgitation of opinions from people who don’t aren’t necessarily fans of gold as an investment asset. It can start to sound like noise that is frustrating when it does not provide anything new and useful to someone who is truly interested in investing in gold. If you are a novice, this can all be confusing.

Let’s revisit some of the predictions that have been made about gold… 

In 2012 there were headlines with complicated graphs and analyses about where the price of gold was heading then. The headline made predictions of gold reaching $6000. The rationale was that if the bull market then persisted and followed the 1970s bull market, the price of gold could reach the level of $6000 before 2014. Instead, the price of gold start off at $1679.00 an oz. on the 23rd of January dropped to $1382.00 on the 14 March 2014, and ended 2014 at $1181.00 an ounce on the 31st of December 2014.

How spectacular wrong that prediction was. Instead of going up the gold price actually began a steady decline.

This is not to say that it is implausible for gold to reach $6000 an oz. It is possible and probably likely to happen but the problem with that prediction was that it was time-oriented and that timing was completely off.

One company or financial institution that is always making predictions about the direction of the gold price is JP Morgan. Back in 2013, market analysts from JP Morgan predicted that gold would hit $1,800 by the middle of 2013 mainly because of the instability in the gold mining sector in South Africa. Five months after that prediction was made the price of gold had reached $1,233 an ounce. It never even came close to $1,800 which compared to a lot of other outlandish predictions, $1800 was safer but the price dropped by a whopping 26% in five months.

And then Trump came along as the president of the U.S and sent speculators into a frenzy. At first, the headlines were prediction a $1,500/oz. in his first term. Apparently gold did not see all these signals analysts were seeing and on 31 July, the gold price was still languishing on the 31st July 2017 an hour.

With Trump, the price predictions just kept getting more outlandish because of the kind of president and his disregard for political diplomacy and protecting the economy. At one point, the headlines said that the price of gold under trump could go up to $10,000/oz. That never happened in the four years he was in office.

Did these “experts” ever walk back their predictions? Why does it seem like they keep saying the same thing? Buy gold! Buy more! Buy now!

Owning gold has become more about financial survival than ever before but if you are obsessed with profits then you might miss the real fundamentals. With inflation being on the rise it has become imperative for people to look for ways to protect their wealth, and investing in gold is a tried and tested method that has always worked. Gold is like real money because it holds its value well. With the declining value of the U.S dollar value over time, people’s perception of owning more paper currency versus owning physical gold has changed. People expect gold to do better and in general, it does but do be careful not to put too much stock on the future performance of the gold market.