This chart by Edward Gofsky depicts a gold dollar consolidation phase that lasted for twelve years, from 1993 to 2005-2006. Interestingly, this analyst believes that we are currently witnessing a similar consolidation phase in the gold market.
Since 2011, the gold market has remained stagnant, but recently, it seems to be breaking through and staying above the $2,000 mark. This resemblance to the previous consolidation period has sparked curiosity and excitement among investors.
In the last consolidation phase, gold made a remarkable move from approximately $400 to $1,900 in less than five years. This five-fold increase raises the question: Could history repeat itself ?
Typically, when commodities, stocks, or indices consolidate for an extended period, people tend to discount any potential rise. They assume that it will remain in the consolidation phase indefinitely. However, this twelve-year consolidation has made people forget the past performance of gold. It has reminded us that gold has the potential for significant growth.
If we consider the possibility of achieving similar targets this time around, gold could potentially reach nearly $10,000 in the next five to six years. Although there are many variables and uncertainties, it’s not entirely out of the realm of imagination. The analyst’s chart shows a potential trajectory from $2,000 to $3,200, then a decline to $4,700, followed by another rise to $9,400. This projected path suggests a six to seven-year timeline for these potential significant moves.
Now, let’s pause for a moment and imagine the impact of such a price increase. Even at current USD dollar rates or with a stronger INR, where the Indian rupee gold price would reach unimaginable levels. While I won’t convert and quote a specific number, it’s safe to say that it could be significantly higher than where it currently stands.
Every stock or commodity experiences various phases throughout its lifecycle. These phases include concentrated moves, which often present excellent investment opportunities. It seems that we may be entering one of those phases for gold.
With these projections in mind, if you haven’t already, it might be a good time to consider investing in gold. It serves as an excellent hedge against equity, providing stability and diversification to your portfolio.
If you have any questions, please write to support@weekendinvesting.com
