Where might gold prices head in the future?
To understand what could happen to the value of gold in the next few years, pull up a virtual chair and sit down with us and precious metal expert, Nicky Shiels, the Head of Metals Strategy at MKS PAMP.
With her treasure trove of insights, we hoped to unearth precious metals' hidden secrets, including those elusive price forecasts and some golden nuggets of wisdom.
Expect to learn about:
- Gold and silver price predictions
- Whether now is a good time to invest in gold
- Crypto versus gold debate
- And any technological advances that could disrupt the metal market
If you missed our live Q&A session with Nicky, where were you?! But don’t worry, you can watch it below or read on to digest the main takeaways.
Gold price revision from Nicky
Gold price predictions are a bit like trying to guess how many jellybeans are in the jar – you can crunch numbers, analyse trends, and even throw in a bit of magic, but you might still end up with more jellybeans than you bargained for!
Global economic twists, political somersaults, and even demand for gold can play a part in the value of gold. So although predictions can be relatively accurate, they are not guaranteed.
However, forecasts help investors make informed decisions on when and whether to buy and sell their gold.
Plus, with award-winning Nicky's expertise in precious metals (we’re not kidding - last year she won the LBMA price prediction challenge), we had to ask…
At the beginning of this year, Nicky predicted the price of gold at $1,880 and revised it later at $1,930 per ounce.
"Things really started to escalate in March. I call it 'March madness' with the banking crisis. It shook a lot of confidence in the system, and you had a lot of current precious metals owners or new precious metals owners looking to relocate wealth. So, I have revised my price forecast, and we're looking at perhaps revising again [...]."
Nicky goes on to add that a lot of the prediction depends on the Fed but also adds that since “gold is traded above $1,930, [the price prediction] will likely be higher.”
What’s the price forecast of gold for the next 10 years?
If we consider how the gold market has increased substantially since 2003, back when flip phones were a thing 📱, we can start to get a bit excited about where it’s going in the next 10 years. Although historical trends don’t guarantee future trends, Nicky thinks that:
“$3,000 within 5 years and perhaps $4,000+ in 10 years is not unrealistic.”
“I think there will be a lot more volatility in markets going forward. There are these big structural themes that are happening [like] the ongoing de-globalisation, de-dollarisation, and higher inflation - all of these are structurally pretty [optimistic towards] gold.”
Stagnation in the gold market
However, more recently there has been a shift in the supply, demand, and sentiment surrounding the precious metal. This period of little price movement or volatility in the gold market is known as stagnation.
Although gold is a relatively stable investment, sometimes other economic factors can trigger a time of stagnation. Nicky says:
“The banking crisis drove a reallocation of wealth. The last month has been pretty quiet and this was reflected in the gold price, where [it] came down [by] $100. I do think there is still some fear and [...] if there is another shaky headline around a bank, gold will respond to that.”
Given the ongoing uncertainties around banks, let’s get into whether gold can safeguard against inflation.
Is gold a hedge against inflation?
In the last few months, gold hasn’t seen a price increase compared to inflation. So is it right to say that gold is a hedge against inflation?
“In its simplest terms, yes. Gold is a hedge against higher inflation.” Nicky says.
For the past two or three decades, inflation has been relatively low. The Fed can't control external factors like the war in Ukraine. And as inflation rises, gold becomes more attractive.
In the short term, inflation is a double-edged sword because gold might drop if the Fed fights inflation aggressively. Yet, with the Fed near the end of rate hikes and inflation not at 2%, gold demand could stay strong.
With the world's economic situation in mind, is gold still the go-to safe haven?
Is gold a safe haven asset?
Gold has long been considered a safe haven asset. This means that it tends to retain or increase its value during times of economic uncertainty or financial crises.
However, with recent geopolitical and economic events causing stagnation, can we really still call gold a safe haven asset?
Nicky thinks so.
“I think, yes. Gold is still a safe haven asset.”
“The best example is looking at the gold’s function last year. Gold ended the year flat, [...] it was pretty steady. I think gold buyers were frustrated because there was a war and inflation [and they wondered why the gold price wasn’t higher].”
“But the world fell apart last year.”
“I think gold proved itself as a safe haven. It was relatively safe versus crypto, equities, bonds, [and] currency. So [gold] did what it should’ve done last year. It indicated it’s a true and trusted safe haven.”
OK, since crypto’s been mentioned, let’s get into it…
What about investing in gold vs crypto?
“The gold versus crypto argument is very interesting because they stem from the same anti-fiat argument.”
“But they're very different asset classes. One is extremely volatile, liquid, and very immature.”
“Gold is mature, safe, and liquid. So it comes down to investor preferences and having a diversified portfolio.”
Do you think Bitcoin will ever compete with gold as a safe haven?
The choice between investing in gold or crypto really depends on how comfortable you are with risk and emerging opportunities. Bitcoin is relatively new, although it first reared its head in the investment market in 2009, when social media was just a toddler.
Whether cryptocurrencies will grow up to be as reliable as gold or as unpredictable as a weather forecast remains the million-dollar question. 💰
Nicky thinks: “Crypto is an immature market that needs to work through the regulatory hurdles. It’s been questioned this year, and it needs to win back a ton of confidence.”
“Will it compete as a safe haven? Probably unlikely.”
“Will it compete as a fiat hedge? That’s more likely.”
“That’s how I’d look at the Bitcoin vs. gold argument. Now if you see increasingly more central banks, retailers, institutional investors looking for alternate ways against fiat currency - that’s where crypto can play a bigger competing role with gold.”
Is now a good time to buy gold?
“As an investment, yes. Gold has already come down $100. [...] There may be a little downside risk if the Fed does hike, but I think they’ll be pretty short-lived. If it’s for the long-term, it makes sense to diversify, especially if you have very little or no gold exposure.”
One option is to invest in both - diversification could involve a mix of both gold and crypto to balance benefits and risks.
Whether you invest in gold or crypto in 2023/24, there’s more than just price predictions at play.
Are there any technological innovations that could disrupt the precious metal market?
We’ve got one word for you - if you can call it a word, it’s an acronym really – AI.
In the last 12 months alone, AI has gone from a sci-fi movie spectacle to part of our everyday lives. With this progress, the precious metal market could experience some disruptions. Here’s what Nicky has to say:
“There’s no direct input of gold into the actual processes from an industrial perspective. But you should look at gold as a hedge against those disruptions that it may cause to jobs and potentially economic growth.”
So it’s probably a good idea to start building a gold savings portfolio, given the economic situation and technological advances. But what about other precious metals?
So what about the price of silver?
“Silver is undervalued. [...] If we expect a recession to come, we are seeing most industrial commodities, whether it's oil or silver, there is a hesitancy to own them. But ultimately, I’m a silver believer. Silver plays a bigger role in the energy transition than gold. So for the short term, I have a $24 forecast. For the long term, I think silver has a ton of potential.”
And there you have it - a glimpse into the insightful world of Nicky's expertise on gold performance, other precious metals, and crypto.
Want to keep learning? Watch another Q&A, where Alessandro covers your big questions on cryptocurrencies, precious metals storage, and more.