Gold In The Aftermath of 2020

GOLD SINCE 2020 

When gold was trading above $2000 oz. in the summer of 2020 the yellow metal was receiving its fair share of attention.  After a low point just under $1050 oz. in December 2015, the gold price had doubled in four and one-half years and bullish optimism was at fever pitch.

Considerably more than a few people seemed convinced that the U.S. dollar was about to go bust and price projections for the gold price were off the charts. Below is a chart of gold for the period noted above which shows clearly the reason for all the excitement…

Gold Prices – December 2015-August 2020

Remember that the big push that took the gold price from $1600 oz. to its post $2000 peak came over a short three-month period following huge transfusions of “free money” and cheap and easy credit from government-sponsored programs for individuals and businesses.

As a result, some were calling for a collapse in confidence in the U.S. dollar and a resulting gold price of $10,000 or more.

So, where are we now? Below is another chart; this one shows the gold price action since the summer of 2020…

Gold Prices – August 2020-Present

While you are pondering where the moonshot went, here is another chart which shows the same price action for the same time frame after adjusting for the effects of inflation…

Gold Prices (inflation-adjusted) August 2020-Present

What should be disturbing to those who are anxiously awaiting a much higher gold price, is the fact that the above decline came during the midst of some of the worst effects from inflation in more than forty years.

And the U.S. dollar? Contrary to calls for its demise, the dollar has been very strong. Whether that strength continues, remains to be seen. At this point in time, the dollar’s demise is on hold.

WHAT TO EXPECT FROM GOLD 

Not much; except on the downside. The gold price has been declining since 2020. After  swimming in a sea of false hopes for the past three years, gold continues to move further away from the unrealistic price targets of investors and others.

Gold will sooner break $1600 on the downside before breaking $2000 on the upside. 

(see Gold And The Normalcy Bias and Silver “Sediment” – Encore For Silver)

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!

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