For most of the past decade, we have been in a long phase of excessive gold supplies, which wasn’t really much of a subject for people outside of the industry.
But 2 years ago, gold supplies flattened and finally reached a peak before entering into a rare and interesting phase: deficient gold supplies.
With diminishing supply growth now picking up speed, this new phase could very well open up new possibilities for gold.
Periods of deficient gold supplies have often created or predicted upward momentum for the price of gold, as you can see in the chart below.
This is what analysts at Wells Fargo recently explained:
"Such times in the past have sparked some of gold's strongest price rallies … We believe gold could be on the eve of a new commodity bull super-cycle, which would be only the seventh since the year 1800”.
It's interesting to note that other historical trends for gold such as low real interest rates, an expected rise in inflation, and unprecedented money printing have also been building up over the past year.
We can only wait and see if this outlook proves to be true.
But with the price of gold currently hovering low at the $1,700 mark, it could mean a strong turnaround for gold in 2021.