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Gold(GLD) Price Forecast Is More Than $2,500


What is the fair price of gold? Gold Price Predictions And Forecast Is More Than $2,500?


Traditionally, gold is one of the investors' favorite investment tools, and gold is also an essential asset when a bear market coming.

Through the following simple model of gold, it has certain reference significance for the reasonable price of gold at different times.


The following two methods to calculate the reasonable price of gold? The pricing method of gold is to calculate the moment when the market needs to reprice gold.

For example, during the financial crisis, the price of gold at that time and the money supply at that time were compared with the current money supply to calculate the current reasonable price of gold.

method one:

In 2008, when the gold price was 880 US dollars, the M2 money supply at that time was 7800 billion.

The current M2 money supply is 18,000 billion, so it is inferred that the current gold price should be 2030 US dollars.

United States Money Supply M2
United States Money Supply M2

If it is provided in M1 currency, the money supply at that time is 1600 billion, and the current M1 money supply is 5600 billion, then it is inferred that the current gold price should be 2660 US dollars.

Method Two:

Using the value-added calculation of the US balance sheet, the expansion rate of the assets of the balance sheet, if the US assets doubled, then gold should double.

the gold price calculation formula
The gold price calculation formula

However, if through this printing of money, the GDP of the US economy is inflated, it must be calculated by adding the US GDP.

United States GDP
United States GDP

In 2008, the GDP at that time was 14,712 billion, and now the latest GDP is 21,427 billion. By increasing currency issuance, it has indeed driven 44% growth in the US economy.

United States Central Bank Balance Sheet
United States Central Bank Balance Sheet

Calculated from the US balance sheet, if the US balance sheet rises by 50%, gold rises by 50%. At the same time, it will be deducted GDP growth in the United States.

Because the increase in the balance sheet is logically proportional to the gold day, so it is a number. The growth of US GDP is logically inversely proportional to gold, so it is a divisor.

Taking 2011 as an example, gold has maintained a rise for several years. From 2008 to 2011, the balance sheet of the United States expanded by 143%, and the gold and gold theory rose by 143%. But GDP also rose by 5.6%.

The reasonable price of gold in 2011 was US$2025. As a result, his highest price was US$1920, almost US$2,000.

So how do you explain that after the gold price fell, $2,000 fell to $1,000?


Because the Fed stopped QE at that time and even reduced its balance sheet. Looking at the balance sheet, the Fed began to shrink its balance sheet in 2014.

This resulted in a 16% reduction in the balance sheet.

At the same time, GDP has expanded by 17%. These two factors are not good for gold at the same time.

It was calculated that the fair price of gold at that time was 1076 US dollars.

Then the forecasted price of gold in 2020 is based on historical data to calculate the reasonable price of gold.

Calculating with data from 2011, in 2019, the balance sheet expanded by 142%, GDP grew by 36%, and the fair price of gold was US$2,770.

Calculating with 2018 data, when gold goes to the lowest level but 1160 US dollars, the balance sheet grows by 155%. If GDP grows 0%, the reasonable price of gold is 2958 US dollars.

Gold price chart
Gold price chart

What is the reasonable price of gold? There are traces to be found. Calculating the fair price of gold through years of data proves that the price of gold should be more than $2,500.



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