Weekend Gold Forecast - Sunday, Jan. 24

brass metal frame

Gold remains stuck in consolidation/correction mode, and this can be frustrating to some investors. At times like this, it is crucial to remain focused on the long-term goal. Our primary forecast still expects a minimum target of $8500, likely 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’ll see the gap between permanently and temporarily closed businesses has increased as lockdowns continue.

Foreclosures of homes behind 90+ days are down -95.33% year-over-year, and total US foreclosures were down -82.03% in 2020. There is a massive backlog of evictions and foreclosures looming in 2021. Increased housing inventory in late 2021 could put pressure on housing.

Of the top five states that are 90+ days behind, three are in deep trouble. You’ll see year-over-year delinquencies are up roughly 800% in Hawaii, Nevada, and Alaska. These states are heavily dependent on travel and leisure.

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.

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 LONG-TERM

 As investors, we need to remain laser-focused on the big picture. I believe gold started a new 10-year advance in 2018 (similar to 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 dollar devaluation. My goal as an investor is to accumulate as many hard assets as possible leading into that bubble. 

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Disclosure: None.

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