How high do you think the gold price can go? Is it too late to buy gold? These are questions people are asking. How do you answer that question?
One way to look at it is to look at what happened before. Well in the last crisis the US central bank, over a three year period:
- The Federal Reserve increased its balance sheet by 240%
- The Gold price increased by 163%
Whereas since the crisis started in March:
- The Federal Reserve has increased its balance sheet by 50%
- The Gold price has only increased by 18%
- So far the Gold price has not caught up with the balance sheet yet
And most likely the Fed has not finished with increasing it’s balance sheet. Increasing it’s balance sheet is how the Fed prints money and injects it into the economy. For more information read this post:
If you assume a similar performance as in the last crisis, you could see gold move from USD 1,455 to USD 3,800 within a 3 year period (ie. by the end of 2022).
So how much more money do you think the Fed will print? How much further do you think the price of gold can go?