Yes, indeed, you read that correctly: gold is trading at all-time highs. Maybe not (yet) in U.S. dollar terms, or in Euros, but certainly in many other currencies. For many currencies, especially in weaker countries, gold has exploded to all-time highs in 2015 and early 2016. That even applies to some large countries, like Australia, Canada, Mexico, as seen on the next charts.
So, the question really is how long it will take before gold goes sky-high in dollar and euro terms?
Let’s answer that question by looking at some historic facts. The next chart, courtesy of Hard Asset Alliance, highlights previous gold price explosions. As seen on the chart, gold has a track record of rising “out of the dust”, and rise “sky high” in no time. It has happened several times in the past, so why shouldn’t it happen again, right here right now?
If anything, when put into perspective, gold’s rise in 2016 has been impressive when compared to other assets (think stocks), but really peanuts when compared to previous decades.
Is this rally for real? In other words, are we set to rise to 10-fold in the coming months?
We don’t believe things will evolve THAT fast. The grand monetary experiment is not over yet, according to us. When comparing Europe and the US with Japan, we see there is much “room” for much more monetary easing. With that, we do not say that all countries will go as far as Japan goes. We are just saying that this is probably not the end, but rather an intermediate stage of more monetary interventions. Gold will probably explode 10-fold as we will near the real ‘end game’, probably in two or three years.
Investors will know whether gold’s recent rally is ‘the real deal’ by looking at which price point gold will retrace, and till where it will correct. If gold moves higher than 1,300 USD without correcting meaningfully, then we are up for huge price moves. At the downside, we should see $1,110 hold, otherwise this would be a false breakout.