Gold Price Forecast 2020: The Shift Towards Precious Metals Has Begun

The paradigm shift I spoke about last year is unfolding before our eyes. Precious metals are likely to emerge from the global COVID-19 crisis as the premier asset for investors. 

Investment Themes

Every decade has a distinct investment theme. One asset class rises to the top and outperforms everything else. Below are some examples.  

• During the 1990s, the stock market surged to record highs. An explosion in Internet led stocks oversaw the dot.com bubble. The Nasdaq rallied from 330 in 1990 to 5100 by 2000.
• During the 2000s, precious metals and commodities became the best-performing assets. Gold rallied from a low of $255 in 2001 to $1923 by 2011.
• During the 2010s (until now), money flows switched to equities. Low and negative interest rates fueled record stock buybacks and rising earnings multiples. The DOW bottomed at 6469 in 2009, and prices peaked in March 2020 at 29,600. 

After an 11-year bull market in stocks, the next asset shift has likely begun. Loose monetary policy and negative bound interest rates suggest 2020 - 2030 will be a decade that heavily favors tangible, hard assets like gold and precious metals. 

Precious Metals Demand Shock

The crashing stock market and global pandemic triggered sudden and likely irreversible demand for precious metals. Last year I mentioned how record low gold eagle coin production probably signaled a turning point in demand. That appears accurate as bullion products fly off the shelves. 

Check Outà Gold Eagle Coin Sales at Record Low, Investors Sleeping

In the US, the primary coin dealers sold out of American Eagle coins (gold, silver, platinum) last week. Premiums have skyrocketed. There’s no putting the genie back in the bottle - an unprecedented shift to precious metals has started, led by the frustrated and terrified public. 

Note: Demand for silver and platinum is spiking as prices reach fresh lows. The current deflationary forces could keep costs suppressed temporarily, but their trends should turn higher and follow gold as investor demand grows. 

Long-Term Gold Target 

If gold comes back to test the $1350 - $1400 breakout area, that could be the last great buying opportunity of this decade. By the end of this decade, we expect gold to reach $7,500 - $10,000.

A $7,500 - $10,000 price target for gold sounds absurd, I know. Before you dismiss it, let’s think about the potential triggers that could yield such lofty prices. 

• Loss in Confidence - A total collapse in confidence in Governments and their ability to manage. à Very possible
• Widespread Money Printing - Governments may resort to debt monetization and currency depreciation to inflate away record debt levels. à Already occurring. 
• Speculation- A surging uptrend and new all-time highs in precious metals leads to the fear of missing out and sparks a speculative bubble. à Likely, but probably years down the road. 

Currently, our Gold Cycle Indicator is at 46 and entered maximum bottoming - suggesting gold may be approaching a bottom. I think it could drop further and perhaps reach a score of zero in April or May. 

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. 

AG Thorson, CMT
Gold Predict Forecast