Gold Forecast – Big Picture Forecast Expects $8500 by 2028
The financial crisis that began in 2020 is far from over. It is estimated that roughly 20% of all businesses at the end of 2019 are now closed permanently. In the chart below, you will see the gap between permanently and temporarily closed businesses increases as lockdowns continue. Expect more lockdowns in February and March.
Looming Housing Crisis
Of the top 5-states that are 90+ days behind, three are in deep trouble. The year-over-year delinquencies are up roughly 800% in Hawaii, Nevada, and Alaska. These states are heavily dependent on travel and leisure. There is a massive backlog of evictions and foreclosures looming in 2021. Increasing inventory in late 2021 could put pressure on housing prices, in some areas.
Record Inflation Expectations
Inflation expectations reached an all-time high in January 2021, according to the Bank of America Fund Manager Survey. The previous peak was in 2004, which corresponded with a robust 7-year uptrend in gold (see long-term gold chart).
The gold cycle indicator finished the week at 57. We remain in cycle bottoming, and this continues to be a good long-term accumulation point.
GOLD PRICES BIG PICTURE
As investors, we need to remain laser-focused on the big picture. I believe gold started a new 10-year advance in 2018 (like 2001). I expect a continued rise into 2028 with occasional pullbacks (like now) that should be bought aggressively. I have a minimum target of $8500. However, I think gold will well exceed that price objective.
At some point, probably in 2027 or 2028, I expect precious metals to enter a parabolic bubble. During that phase of the bull market, prices will rise day-after-day and month-after-month without stopping. The rise will likely be due to a collapse in confidence regarding government securities and currency devaluation. My goal as an investor is to accumulate as many hard assets as possible leading into that bubble. The Educational Portfolio for Premium Members was designed for just that.
Note- The 2011 peak in gold ($1923) did not reach “bubble status” as buying was primarily from eastern investors. This time the buying will be from westerners as confidence in government plummets, and that could trigger a speculative bubble that dwarfs the 2011 peak.
Gold prices continue to struggle after bottoming in late November. The gold cycle indicator remains in bottoming territory, which is a good time to accumulate long-term holdings. In the near-term, prices need to close above Thursday’s $1874.60 high to establish a mid-cycle low. A breakdown below $1800 would extend the correction phase.
As long as silver stays above last week’s $24.04 low, it appears prices are forming a rounded continuation pattern. A breakout above $30.00 in February or March would signal an advance to $35.00 to $40.00 by April/May.
The underlying trend in platinum is strong, and I see explosive potential once prices get above $1200. At nearly $750 below the price of gold, savvy investors are starting to take advantage of the price disparity. In the meantime, a pullback is possible with support surrounding $1050.
The initial rise off the October low appears complete, and I believe prices are nearing a pullback. Progressive closes below $41.00 would confirm. Initial support arrives at $37.00. Medium-term support would be $34.00, and in the event of a sharp pullback, prices could reach $30.00 – $32.00. I remain very bullish on energy.
In summary, while the near-term picture for gold is mixed, the long-term prospects are outstanding. We expect new highs for precious metals in 2021. However, the real profits will likely come in the bubble stage of the bull market around 2027/2028. Now is the time to be accumulating, in our opinion.
AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. He posts daily updates to Premium Members. For more information, please visit here.