Gold Nears All-Time High: 7 Reasons It Could Go Much Higher

For nearly two years, gold’s been on quite a run. In fact, the precious metal is getting close to an all-time high. That hasn’t happened in nearly a decade.

Investing in gold is a tricky business. Historically it seems that gold likes to run one of two ways: it’s either very hot or very cold, and there’s little in between.

Gold tends to thrive as the world is falling apart. For example, gold shot up in 1979-80 as inflation, the Cold War, and the Iran hostage crisis took center stage.

And conversely, good times for the world are bad for gold.

For example, from September 2011 until late 2015, gold plunged from over $1,900 per ounce down to $1,050. While I wouldn’t exactly call those years “good times,” they were much better than the period immediately before it, when the economy slowly emerged from the worst economy since the Great Depression.

(Click on image to enlarge)

Interestingly, gold’s latest upswing began in 2018, before the novel coronavirus made landfall. As late as November 2018, gold was going for about $1,200 per ounce. Just recently, gold cracked $1,800 within striking distance of its all-time high.

Looking at the startling jobless and coronavirus numbers, it’s easy to see that bad times are upon us… so gold is thriving.

However, in adjusted terms, gold is still far from its all-time high. Gold would have to get to $2,300 per ounce to match its peak from 40 years ago.

Gold’s Eternal Allure

There are several factors that make gold a fascinating topic. For example, the metal never rusts. You can take the gold out of an Egyptian pyramid and have your dentist stick it in your cavity (though they might want to clean it first). It’s also non-toxic, which helps.

Here are a few more gold facts:

  1. Gold is incredibly soft—it can be pounded down to a few millionths of an inch thickness. One ounce can be stretched for 50 miles. It’s also very heavy. Despite what you may believe from The Treasure of the Sierra Madre (“Badges? We ain’t got no badges!”), gold dust wouldn’t have just blown away.
  2. Gold has been found on every continent on earth and has strong religious connections. It’s mentioned in the Bible more than 400 times.
  3. Plato mentions the gold/silver ratio to be 12, meaning when he lived, one ounce of gold could be traded for 12 ounces of silver. The current ratio is around 80.
  4. Recent historical evidence suggests that Isaac Newton was mainly an alchemist. The physics stuff he did was just playing around on the side and was probably an offshoot of his efforts to makes gold. Strands of his hair that are still intact today show traces of lead and mercury.
  5. Gold is also a really good conductor. Despite its high prices, gold is used in many electronics.
  6. There’s more gold at the New York Fed, located way below 33 Liberty Street than in Fort Knox.
  7. Speaking of Fort Knox, Ian Fleming’s 1959 book, Goldfinger, and the subsequent 1964 film starring Sean Connery revolves around a crazy idea—to blow up all of the U.S. gold at Fort Knox, making it radioactive and worthless… thus making titular Bond villain Auric Goldfinger’s gold worth more.
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