Jan Nieuwenhuijs, an analyst specializing in the global gold market, has forecasted an upcoming multi-year gold market for gold prices. In a recent article, Nieuwenhuijs explains that the conjunction of different factors, all favorable to gold, and the geopolitical situation, signal an acceleration of gold appreciation that might take prices to $8,000 per ounce in the next decade.
The expert explains that recent price increases have put gold prices out of a multi-year consolidation zone, which held prices approximately in the same zone since 2012. One of the long-term indicators harnessed by Nieuwenhuijs is the low percentage of gold as part of the global financial assets, estimated to be more than 6% in 1980, and that now only reaches 3%.
Also, the level of gold currently backing the U.S. dollar, still the world’s reserve currency, is at almost historic lows. Nieuwenhuijs declared:
The two previous lows were in 1971 and 2000, after which multi-year gold bull markets followed. So, most likely a new bull market is upon us.
Also, the expert explains that gold as a percentage of the global reserves is low compared to past levels, but it is rising due to the loss of trust in the dollar due to two factors: the freezing of Russian assets in the U.S. and the spiraling debt combined with the still unsuccessful attempts of the Federal Reserve to tame inflation. This, consequently, is pushing central banks, like the People’s Bank of China, to purchase gold at record levels.
Finally, the size of the equity market compared to the U.S. economy size has reached record levels. Nieuwenhuijs explains that the equity bubble, poised to burst, will be followed by an easing of the monetary policy to re-stimulate the economy. “This leads to a vicious cycle of bubbles and ever-easier money in which the value of currency incrementally declines, and the gold price appreciates,” he concluded.
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