Gold prices have been on a tear since Bitcoin fell $4,300 from its all-time high of more than $19,000 in mid-December.
Since Dec. 11, the price of an ounce of gold has climbed from $1,242 to $1,313 today (Jan. 9), for a gain of 5.72% over one month.
And this run-up is just the beginning to a gold bull market.
In fact, Money Morning Resource Specialist Peter Krauth believes gold prices will rise to $5,246 by 2020. That implies a profit opportunity of 300% from current levels.
Liquidity moves markets!Click here to learn how you can follow the money.
Usually, investors flee to gold as a safe haven from market uncertainty and political turmoil. And with the stock market hitting record highs, many investors have looked past gold.
But Krauth sees three major catalysts pushing gold prices higher over the next several years.
Here’s what will drive gold prices up to $5,246 by 2020…
Gold Prices Catalyst, No. 1: Rising Inflation
Rising inflation will drive the price of gold higher in 2018.
Inflation is the rate at which the price of general goods and services increases. As the inflation rate rises, the purchasing power of the U.S. dollar decreases.
Right now, inflation stands at 1.7%, its second-highest level in the last five years. And as the stock market continues to climb higher, so will the inflation rate.
That’s why the U.S. Federal Reserve manages inflation by raising interest rates. This has kept inflation from rising too quickly, even as the economy grows.
Urgent: Executive Editor Bill Patalon just saw something on his precious metals charts he’s only seen twice in 20 years. He calls it the “Halley’s Comet of investing” – and it could lead to windfall profits. Read more…
But there’s been a growing sense of uncertainty among investors as the stock market keeps hitting record highs. This often convinces people the economy is growing unstable, which can cause investors to exit the stock market.
Since assets like gold are considered safe havens during times of economic uncertainty, gold prices will rise as people protect themselves.
And that’s only the first reason we’re raising our gold price forecast…
Gold Prices Catalyst, No. 2: Fewer Short Bets
Reduced short selling – or traders betting prices will fall – in the gold market also indicates the price of gold will rise over the next three years.
Over the last year, the number of short positions on gold stocks has fallen. One indicator of short interest is the Gold BUGS Short Index (NYSE: HUISH). This index tracks short selling on mining firms that specifically refuse to cut gold production based on gold price movements. In the last 12 months, HUISH has dropped 9.27%, indicating short interest in the broad gold sector is falling.
This shows a shift in sentiment from bearish to bullish for gold.
Canadian gold mining company NovaGold Resources Inc. (NYSE: NG) shows an even starker change in sentiment. In the last six months, the volume of short bets on the stock declined 32.75%, from 19.05 million shares to 12.81 million.
But wait till you see this shocking trend, which predicts when gold prices will rise…
Gold Prices Catalyst, No. 3: Climbing Interest Rates
Since 1986, Fed interest rate hikes have been followed by climbing gold prices.
For 30 years, gold prices have fallen prior to an interest rate increase, and then climbed after the increase.
And this trend is happening again right now. The Fed’s September 2017 meeting showed an interest rate hike wouldn’t be likely until December 2017. And gold prices peaked last year at $1,348.80 on Sept. 8, before falling to $1,240.
When the Fed raised interest rates for the third time in 2017, on Dec. 12, the price of gold shot up from $1,240 to $1,309 by Dec. 29, for a 5.56% gain in 17 days.
Gold prices are currently trading at $1,313.
It’s expected that rates will continue rising in 2018, when Jerome Powell starts as chair of the Fed. If gold prices behave like they have for the past 30 years, then they should continue rallying in step with further rate increases.
Now that we’ve run through the three reasons why gold prices will increase in 2018, here’s our shocking gold price target for 2020…
Our Gold Price Target for 2020
Krauth’s newest gold price forecast has the precious metal soaring to $5,246 an ounce by 2020.
“The bears have been unable to quash gold,” Krauth said. “That’s why I’m so confident in this move to the upside. And it came right after the Fed hiked rates.”
If history is any indication, gold prices could rise a tremendous 297% over the next three years from its current price of $1,318.50.
And gold prices are already taking off in this bull market. After hitting a five-year low of $1,056 in November 2015, gold has staged a 24.86% comeback.
Since 1970, every gold bull market has offered astounding returns. The median return and duration of each bull market over the last 47 years has been 451.4% and 41 months, respectively.
Up Next: Rare Gold Anomaly
Money Morning Executive Editor Bill Patalon just caught something on his gold charts that he’s only seen twice in the past 20 years. A $13 billion gold anomaly he calls the “Halley’s Comet of investing.”
It’s very rare, and fleeting, and Bill sees things lining up perfectly to bring some very sizeable precious metal profits to well-positioned investors.
About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.
Disclaimer: © 2018 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.
The post Why We’re Forecasting Gold Prices to Soar 300% by 2020 appeared first on Money Morning – We Make Investing Profitable.
Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I am a contractor for Money Map Press, publisher of Money Morning, Sure Money, and other information products. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. In some cases I receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.