After weeks of upward momentum, the price of gold broke through the $2,000/oz. price level on Friday, November 24, 2023. Gold’s price at the time of this writing—$2,040/oz.—brings gold close to its all-time high of $2,072.50/oz, set in August 2020.
To some, this may appear to be a high watermark for the precious metal. The $2,000/oz. price point has even been referred to as a “psychological ceiling” for the gold market. In my opinion, as well as in the opinion of many market analysts, this couldn’t be further from the truth—and now may actually be a great time to buy gold.
According to analysts, gold’s upward trend has room to grow.
Analysts looking at the recent performance of gold predict that prices may continue to rise—and soon. For example, in a November 21, 2023, note to clients, Mark Newton of Fundstrat predicts gold prices will soon reach new all-time highs. “Gold [is] showing additional proof that a rally back to new all-time highs is underway,” Newton says, adding, “My technical target for gold is $2,500/oz., and it looks appealing to be long precious metals given falling real rates, rising cycles, and ongoing geopolitical conflict.” In this context, to “be long precious metals” is industry talk for “purchasing with an expectation to sell later at a higher price.”
Dutch bank ING also forecasts gold prices will reach record highs in 2024, fueled by the same factors Newton mentions in his note to Fundstrat clients. Goldman Sachs analysts also cited real rates as a force behind gold’s rally, noting that “gold’s shine is returning.”
In other words, gold may not be done rising, and those thinking they’ve missed the boat on gold may still have time before prices rise further.
Gold has broken through many “psychological ceilings” before.
Several articles have described a $2,000/oz. price for gold as a psychological ceiling or barrier for some traders. But according to Philip N. Diehl, President of U.S. Money Reserve and the 35th Director of the U.S. Mint, this phenomenon is nothing new. In fact, Diehl notes that throughout gold’s history, there has been a series of similar barriers that the price of gold has cleared as it marched higher.
“It seems clear that $2,000/oz. has been a psychological ceiling since [the price of gold] briefly breached it in the spring of 2020 and again last spring. But it’s like $1,400/oz. was for the first half of the last decade. Once $1,400/oz. was finally breached in the summer of 2019, gold climbed decisively to a new plateau, settling around $1,800/oz.,” Diehl said. “Similarly, this is what I expect—a decisive climb to a new plateau—once the market is confident that $2,000/oz. has been broken [as a ceiling for gold prices]. Gold has been consolidating support at $1,950/oz., give or take $50, for nine months, so I think we’re about there.”
When adjusted for inflation, gold prices have even further to climb before reaching new highs.
I also spoke with our Director of Education, Brad Chastain, about the history of gold’s upward trajectory—and he made an excellent point about how we tend to view gold prices.
“Buyers often hesitate as they feel an asset is near or at an all-time high. But according to data from gurufocus.com, to reach a new high in real (inflation-adjusted) terms gold would have to cross $3,300/oz.”
What Brad’s referring to here is gold’s then-all-time-high price set in January 1980, which was a mere $850/oz. But if we adjust that price for inflation, we have proof that gold not only has a long history of maintaining its purchasing power, but can also increase in price by nearly $1,300/oz. without breaking its “real” all-time high.
As we continue to experience market factors like falling real interest rates, increased central bank gold demand, and geopolitical uncertainty—all of which help drive gold prices—the future looks very bright for the precious metal. And don’t forget that while focusing on day-to-day or even month-to-month fluctuations in gold prices can be addictive, gold’s true strength lies in long-term wealth preservation and growth.
A new all-time high price for gold in 2024 would be exciting to see, but what about 20 or 30 years down the road? That’s the real question we should be asking—and as near as I can tell, the sky’s the limit, and that’s why taking advantage of gold now may be a great move for your portfolio.
