Last July, gold surpassed its record price, set at $1,921 an ounce in 2011. Since then, it has continued to rise and has suffered a correction, keeping it above that record for nine years. The question everyone is asking now is whether the price will continue to increase or fall.
Sebastian Bowen explains in the Motley Fool that after reaching a high of $2.075, the price of gold has settled around $1,950 an ounce. The rest of the precious metals have also been dragged down by this upward trend. Silver is registering levels not seen in years.
The main reason for this historical rise in gold prices is that the metal is traditionally a haven asset. It means that investors turn to it when there are doubts regarding the immediate future of riskier investment assets, like stocks.
According to Bowen, it’s a bit confusing to watch this historic rise in gold. Especially at a time when global capital markets are also rising. Investors are not too optimistic about the evolution of the stock markets in the medium and long term, due to the Covid-19 pandemic. Besides, massive injections of cash into the global financial system by central banks caused concerns over possible inflation. Bowen explains that we have the perfect mix of ingredients to keep the price of gold going up.
The question that investors and analysts ask themselves is whether the price of gold will continue to rise or if it will fall back to the levels before this record.
Prices of gold and silver will skyrocket in the coming years.
Although gold has registered its highest price of all time, some analysts point out that it is still well below its maximum if inflation is taken into account.
The current gold price is still below the rate registered in 2011, which is equivalent to $2,149.69 an ounce today. Besides, it is well below the historical maximum, which took place in 1980 (equal to $2,722.18 an ounce).
In the silver case, its upside potential is even more significant, since the current price of an ounce of this metal is around $26.80. But if silver were to reach its all-time high, taking inflation into account, it would have to touch no less than a $160.59 an ounce.
Just because the price of gold (or silver) can continue to rise does not necessarily mean that it will. This is according to a statement made by Sebastian Bowen. He is optimistic about the medium-term outlook for precious metals due to the factors discussed earlier. He believes that the currency devaluation will have a cost. The prices of precious metals are likely to skyrocket in the coming years.
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