E The Meaning Behind Gold's Triple Top

In a previous article I wrote:

"Looking at this chart, it should be apparent that gold at $2000 is fully-priced. Unless you are convinced that the US dollar is going to crash soon, then expectations for much higher gold prices at this point  are unwarranted."  ($10,000 Gold Or A Triple Top?)

The article was published in August 2020 and the chart is reprinted below...

Gold Prices - 100 Year Historical Chart (inflation-adjusted)

Last August, the expectations for much higher gold prices were fueled by unreasonable expectations fostered by various items and events such as Fed money creation, interest rates, recession, a weak economy, civil unrest, a contentious national election, etc.

None of these things have any bearing on gold's price (see Gold's Singular Role). Nevertheless, investors and analysts continue to point to them as justification for their expectations about the price of gold.

After posting an all-time high price of $2058 in August 2020, gold established two successive recent lows at about $1775 in December 2020 and $1675 this past March. Some of the fervor dissipated, but the past couple of months has seen a recurrence of gold fever.

Below is the same chart as above, but updated to include activity for the past nine months...

In the charts, you can see that there are three distinct periods of rising gold prices. The first two periods were each a decade in length: 1970-80 and 2000-2011. And both of those periods were preceded by longer periods of time - forty years and twenty years - during which gold's price was not increasing.

The third period was shorter in length and lasted five years from January 2016 to August 2020. It was preceded by a decade of declining gold prices.

The second chart confirms that the triple top is still intact. The price at which gold peaked last August is just shy of Its peak in 2011; and before that, in 1980.

So why did gold stop at those particular price points and what are the implications for those expecting higher gold prices now and in the future?

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Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN'T, AND WHO'S RESPONSIBLE FOR IT  and   more

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