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5 Divident Stocks T0 Own Forever
Gold Price Forecast: Gold to Go Up Further in Current Bitcoin Crisis Lombardi Letter 2021-11-22 12:08:40 gold price forecast gold price predictions gold price chart gold price outlook gold prices 2018 gold price predictions for next three months bitcoin crisis Many analysts have not been bold enough with their gold price predictions for 2018. Along with the erosion of the Bitcoin phenomenon, brewing internal and external risks could push gold prices much higher. Commodities,Gold,News https://www.lombardiletter.com/wp-content/uploads/2018/01/gold-price-forecast-150x150.jpg

Gold Price Forecast: Gold to Go Up Further in Current Bitcoin Crisis

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The Gold Price Forecast Is Not Bold Enough

Many analysts may find themselves forced to revise the gold price forecast. They’ve been too bearish, with most expecting the gold price per ounce in 2018 to peak at about $1,350. Some speak in enthusiastic terms about gold price predictions of $1,375 per ounce by 2020. (Source: “Kitco News Gold Survey: Gold Prices To Shine In 2018,” Kitco, December 29, 2017.)

These figures seem extremely conservative; in fact, they seem way off the mark considering all the factors that could sustain much higher gold prices in 2018. The gold price chart shows a clear pattern, which cannot be coincidental.

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Gold Price Chart

gold price predictions

Chart courtesy of StockCharts.com

Focusing on the highs points on the pattern of increasing peaks, gold prices topped at a 2017 record of just over $1,350 last September. Yet, the valleys are also interesting. The floor has also risen. The lowest gold price in 2017 was roughly $1,190 per ounce. That was last February after analysts changed their expectations for the stock market when Donald Trump settled in the White House. The initial reaction to his win was that the markets would suffer his isolationist and anti-globalization stances.

Trump was also seen as posing too high a risk to the markets after his victory. In other words, investors saw Trump as a disruption to the order. His policies would drive inflation, they feared, forcing the Fed to raise interest rates, strengthening the dollar. Instead, because the economy appears to be growing—for now—the Fed may be reluctant to raise interest rates, fearing that such a move could pull the plug on the stock markets. Trump’s main achievement in his first year as president, if he can take any credit for this, is to have served his first year just as Wall Street headed for its biggest gains ever.

The Imminent Bitcoin Crisis

Last year was also marked by the sudden and overwhelming cavalcade of Bitcoin, which reached a value of almost $20,000 just before Christmas. Many have invested in Bitcoin for the same reasons they may have invested in gold, silver, or other dollar-denominated commodities to manage risk.

The gold price outlook must take into consideration many risks that remain unaccounted. Some “assets,” like Bitcoin or other cryptocurrencies, have proven to be more vulnerable than gold. Since the December highs, Bitcoin prices have lost some 40% of their value. Unlike previous “up and down” patterns for Bitcoin—and other cryptocurrencies—the trend now seems to support much longer retreats. They could be signaling more than a correction; a crypto crash.

The Bitcoin crisis could push the virtual currency much further down. This could mark a rebound for gold prices, which are already at the highs many expected. If $1,300 were the ceiling to beat in 2017, $1,400 will be the new target. Indeed, gold prices could go as high as $1,500 in 2018. The recent tensions in the U.S. Congress that led to a brief government shutdown have already translated into the kind of risk that gold investors need to make bold moves in the metals markets.

Domestic and International Political Risks

The government shutdown does not inspire confidence, hurting the value of the dollar and favoring traditional refuge assets like gold. The shutdown began on January 19. Already by January 22, Senate minority leader Chuck Schumer announced a compromise deal that could keep the government funded for the next three weeks. The compromise does not ensure that Democrats, especially to score political points ahead of the 2018 mid-term elections, won’t bring up the Deferred Action for Childhood Arrivals (DACA) program again. This was one of the conflict points that led to the shutdown. (Source: “Schumer: Deal reached to reopen government,” CNN, January 22, 2018.)

Where gold prices and the dollar are concerned, the arrangement is weak. It may ensure that key government programs remain funded and functioning, but the Democrats and Republicans have not resolved the underlying issues behind the tension. Therefore, the gold price predictions for the next three months should be more bullish.

If the shutdown alone is not convincing enough as a risk (and a boon for gold), consider that President Erdogan of Turkey has started an operation in Syria against the Kurds in the Afrin zone. (Source: “AP Explains: Turkey’s ‘Operation Olive Branch’ in Afrin,” The Washington Post, January 22, 2018.)

It’s unclear where this will end. Everyone seems to be against it, but Turkey is a NATO ally and the United States has been ambiguous when it comes to Turkey’s interests vis-à-vis its actions to contain the threat from Kurdistan Workers’ Party (PKK) separatists. However, the PKK’s de-facto proxy in Syria, the People’s Protection Units (YPG), represents those very Kurds whose help the Americans secured to fight in ISIS.

It’s unclear now what the United States will do. Will it intervene to stop the Kurdish invasion, diplomatically support the YPG, or throw the group under the Turkish bus, as it were? The tensions extend far beyond the Turkish context. Russia sees the United States as interfering in its sphere of interest to sabotage the efforts to normalize Syrian government authority over the territory. Meanwhile, the YPG Kurds, which managed to establish an understanding with the Russians, may appeal to Moscow to intercede.

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