How High Can Gold’s Long-Term Price Rise?

Now that gold’s price in U.S. dollars is well established above $2,000, Patrick Heller thinks it might be possible for the price to rise above $5,000 before the dollar’s collapse.

Author:
Patrick A. Heller
Publish date:
Mar 29, 2024

With the COMEX closing gold price setting several new record highs this month, I am again getting questions about how high I think the price of gold could reach. The quick answer is I have no idea.

Many years ago, when the gold spot price was just a fraction of what it is now, I didn’t think it could ever reach $5,000. My reasoning is that the value of an ounce of gold does not change. An ounce of gold today is worth an ounce of gold next year and next century. What changes is its relationship to other assets that change in value, such as fiat (paper) currencies such as the U.S. dollar. What really happens when the spot price of gold increases, as measured in U.S. dollars, is that the dollar is actually falling in value.

Back then, I didn’t expect the price of gold to reach $5,000 because I anticipated that the U.S. dollar would collapse as a currency before gold’s price could rise that high.

Now that gold’s price in U.S. dollars is well established above $2,000, I think it might be possible for the price to rise above $5,000 before the dollar’s collapse. Note that all paper currencies eventually collapse. The track record thus far is a mean average life of about 40 years and a medial average lifespan of around 25 years. Just because the dollar has survived well beyond these averages doesn’t mean it will never fail.

I still don’t have an idea of how high the price of gold might rise in the long term. However, I can remind readers that the way the public acts can give a major clue of when gold’s price is reaching a major peak. When everyone who could possibly want to own gold has already acquired some, that is the peak.

The way I describe that scenario is if strangers next to you in store checkout lines start saying to you that gold is good to own, or people providing you services such as barbers, hair stylists, manicurists, masseuses, shoe shiners, restaurant servers, and the like also tout owning gold, it might be time to take some profits. That would go double if the mainstream financial publications were also to proclaim the benefits of owning gold. The market is saturated if there are almost no new buyers left to start making purchases.

The converse is true. If every potential gold seller has sold, that would be a strong indication of a bottom in the gold price.

Just remember. It’s not how high gold’s price might climb. Instead, it will be how far the purchasing power of the U.S. dollar will decline before it finally collapses.

Last Week’s Trivia Question

Why are so many coins denominated in the heller monetary unit issued since 1189 A.D. still so relatively affordable?

1250-1400 AD Hand Of God Medieval Coin - Germany
eBay

The original silver hand hellers were issued up to around 1500. Most of these are available today and are in the $15-$40 range. These coins depict an open palm on one side, supposedly the hand of God, used to avoid the prohibition against the use of graven religious images on European coins at the time. The following pure or high copper content coins were almost always the lowest denomination coins of the monetary system. Consequently, they were used in everyday commerce. Survivors today tend to mostly be well-worn, often with some damage, and largely affordable. I own some pieces that are more than 200 years old and cost me less than $5 apiece.