Gold.
Just the name evokes images of wealth, intrigue, movie plots, and those TV commercials enticing you to purchase gold to secure your future, especially in the event that the economy tanks.
As of this writing, Gold is at $1,297.56 per troy ounce. The trouble with looking at the daily numbers is that the daily and even monthly trends are too volatile for most analysis. For our purposes we will use the 3MMA for Gold Futures Prices as quoted by the Wall Street Journal online. The 3MMA has risen a mild, but still normal, 8.9% from an October 2018 low.
The shortest normal length of rise would put the 3MMA peak in May 2019. A mid-2019 high in the Gold Futures Prices 3MMA would be wholly consistent with business-cycle influences, given the diminished demand expected from a global economic slowdown. Electrical Equipment Production, Semiconductor Production, Computers, and Jewelry are all likely to contribute to a relaxing in the demand pull for Gold, thus resulting in downward pressure on Gold Futures Prices. We expect the relaxing in the demand pull to last through 2019.
The current general disinflationary trend, and our projection for it to extend through 2019, also portends downward pressure on Gold Futures Prices.
ITR Economics is forecasting a healthy rate of rise in the US (and other) economies with business-cycle ascent beginning in 2020 and extending through 2021. The resulting increased demand should pull Gold Commodity Prices higher. Looking beyond the next several years, it is reasonable to expect upward pressure on Gold Commodity Prices from sometime in 2023 until late in that decade based on our long-range economic outlook. Our longer-term projection of inflationary pressures, especially in the latter half of the next decade, add to the prospect of higher gold prices a decade from now.
Please remember that we are not providing you with a guaranteed forecast of Gold Commodity Prices here, but rather an analysis of how gold prices normally work within the context of the business cycle. Gold prices also tend to be driven by emotive factors which are sometimes separate from business-cycle economics. Individual investment results may vary. However, you can stay in touch with our general economic outlook, and thus the implication for gold prices, via our ITR Trends ReportTM.
Those interested in investing in commodities as an asset class should consider whether gold belongs in their portfolio. Your investment advisor can provide deeper insight, or I would be happy to introduce you to mine. You should NOT buy gold if you cannot view it as an investment asset. Too many people come to view gold as their wealth; much like Gollum and the One Ring, they fall in love with it. Gold will do you no good if you don’t sell it at the right time. We can help you with the right time, but only you can judge whether you will love it too much to let it go.
Alan Beaulieu
President