Gold prices have gained more than 9 percent in the past two months and 17 percent in this calendar year, reports The Economic Times. No one knows for sure how high gold could go, today or ten years from now. Some, however, believe that gold prices could shoot as high as $5,000 an ounce. Philip N. Diehl, president of U.S. Money Reserve and former director of the U.S. Mint, believes there may be market fundamentals to support a long-term gold rally. Watch the video below and read on to learn why.
How high could gold prices go? The factors at play.
Gold prices topped $1,300 and reached a one-year high of $1,344 last week, notes Business Insider, on the tailwinds of geopolitical tension between the U.S. and North Korea, a struggling U.S. dollar, and the potentially devastating economic costs of Hurricane Harvey and Irma.
Most immediately, North Korea's flight of “missiles over the Japanese Hokkaido islands obviously fueled buying for the flight for safety kind of money including the Japanese yen and gold,” says a Tokyo branch manager at ICBC Standard Bank via CNBC.
Some technical analysts argue that the market has really changed since gold prices broke the $1,300 resistance point. On top of North Korea's unpredictability, there's uncertainty surrounding President Trump's administration and government policy that's also driving market watchers to safe haven assets like gold—uncertainty around members of his campaign and their ties to Russia, the debt ceiling, the future of health care reform, the financial toll of two record-setting hurricanes, threats of a government shutdown, and delays in tax reform.
“There is a combination of events driving gold higher, including both political uncertainty and hedge fund buying. If these extreme political circumstances continue it could drive the price to $1,400,” says Nizam Hamid, ETF strategist at WisdomTree.
If gold prices can hit $1,400 an ounce, could they go higher? Consider the following, courtesy of Philip N. Diehl, president of U.S. Money Reserve.
“There's a lot of people who know more about the gold industry than I do who are predicting $5,000 an ounce. So yes, I think that is possible. I also think it's important to bear in mind that years ago gold was below $300 an ounce and today it's at $1,200 an ounce [or higher]. That's a four fold increase in the [price] of gold. Moving between $1,200 an ounce and $5,000 an ounce is also a four fold increase. So while no one knows for sure how high this market will go, I think it's entirely possible—I think it's likely—that gold will continue increasing in [price] and it might go as high as $5,000 an ounce.”
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On top of the short-term gold price drivers touched on here, there are long-term factors to consider as well, including an uptick in industrial applications for gold and stresses on the supply of gold. If gold supply and demand struggle to keep pace, gold prices could reflect that. In the end, which price drivers will put gold over the $2,000, $3,000, $4,000 an ounce threshold? The answer is anyone's guess, but historical gold prices remain a lesson. In the early 2000s, gold could be purchased for less than $300 an ounce. Since then, the price has quadrupled. Will there be another four-fold increase as Diehl and other industry professionals speculate?
Buy gold before the next price bump
As you saw in this video, Diehl's advanced understanding and experience in the field of precious metals is an amazing asset to U.S. Money Reserve's clients. His experience can be felt throughout the company, whether you're calling to buy gold for the first time or just have questions about today's gold prices. U.S. Money Reserve remains the only gold company in the world led by an esteemed former Director of the U.S. Mint. Call 1-844-307-1589 to experience the difference for yourself. Knowledgeable Account Executives are standing by to help you understand where gold prices could be headed in the next few days, months, and even years.