Summary
- This video discusses long-term gold price targets and forecasts.
- US debt has ballooned to $35 trillion from $25 trillion in 4 years.
- The long-term gold price target is based on historical precedents where gold reserves accounted for 40% of circulating US dollars.
- Central banks have been buying record amounts of gold in recent years.
- There is a growing movement to return the US dollar to a gold standard.
- The US may revalue its gold reserves to improve its fiscal situation.
- Fiat currencies lose value to gold over time, and the dollar has already lost 98.5% of its value since 1970.
- The gold price could reach $160,000 per ounce by 2078.
- Silver is expected to outperform gold in the coming years.
- Gold and silver will eventually buy much more in terms of other assets like stocks and real estate.
This video was made in the beginning of this month, July 2024, knowing that I would be traveling on Friday, July 12th, 2024 the day of its release.
We are going to forgo one week of bullion market update minutia to take a gander at the longer term trends in relation to gold's future long term price targets.
We have done six videos related to this subject prior, and they will all be back-linked in the show notes below along with a public google doc spreadsheet documenting the ongoing data and source links for each respective video present and past.
When we began making these particular types of updates in the summer of 2020, the hard US debt was at the time $25 trillion and it has since ballooned to now almost $35 trillion outstanding, a gigantic growth of 40% more US debt outstanding in just the last 4 years. Continue on this trend and the outstanding US debt will be $50 trillion by the summer of 2028.
This video's long term gold price target data is based on historical US financial history precedents and past where the US Official Gold Reserve value accounted for 40% of the outstanding physical US dollars in domestic circulation at the time.
This happened on three different occasions in the 20th Century. And given building evidence of a global return towards a gold bullion financial foundation this 21st Century, producing another 40% coverage rhyme in time is the thesis of these coming price projections.
This said, the main long term fiat US dollar gold price target I will cite will be conservative in size. Normies unaware of systemic gold and silver price suppression in the west running for decades since the old 1980 high should be able to wrap their minds around the coming price projections.
Government central banks are front running this return to gold. In the last three years central banks have admitted to buying more official gold bullion in sizes and volumes never before seen on record.
To the tune of about 1,000 metric tonnes of gold bullion bought annually in 2022, 2023, and forecasted for this year 2024 respectively. An amount equivalent to nearly 1/3rd of newly mined gold globally per year.
This rabid gold buying is occurring simultaneously as over 130 countries & currency unions, representing 98% of global GDP, are also exploring formations of government issued CBDCs or central bank digital currency programs.
Simultaneously private digital tokens such as bitcoin, the supposed digital gold as many have marketed it to be, is still priced around $60,000 fiat US dollars per unit. Its existence has surely helped pave the way psychologically and build a better collective hive mind understanding of how overrun the world has become with risk laden fiat currency supplies.
But alas, the market capitalization that appears poised to swap its overall size with bonds increasingly looks like gold bullion. Since Covid 2020 the secular bear market in US bonds appears to have kicked off, poorly performing long term US bonds have been increasingly bypassed by international buyers, while central banks many who used to buy US Treasuries are often instead net buying gold bullion in record size.
Now Judy Shelton, an American economic advisor to former President Donald Trump is publicly making the case for the US bond market to return back towards physical gold underlying its credibility. Even suggesting that the US Treasury could officially revalue its Official Gold Reserves markedly higher to build back faith in our future bond auctions.
In the financial accounting manual for Federal Reserve Banks we can see the mechanism the US Treasury may eventually use to make the US fiscal situation balance better than it is at the moment. Likely marking up the gold price of US official gold reserves from the long held depressed $42.22 oz price level set in 1973 to a price level substantially higher perhap during a crisis in market confidence to come.
Here is Luke Gromen's take on how drastically higher US gold prices on the books will have to be marked up to bring back confidence and simply match past historical precedent. Notice a historical 40% coverage figure precedent also applies to the offshore US bond market values.
The largest collective official gold reserve holding in the world is the European Union, and many European Central Bankers particularly in the Netherlands and Germany openly infer their Gold Revaluation Accounts as a way to recapitalize their central bank balance sheets without selling gold or asking taxpayers for funds long term.
Given where the fiat euro M2 supply is at the moment versus the ongoing fiat euro gold price per ounce, we would need to see the spot gold price in Europe six times the size it is now to reach levels not seen since the peak of the last western world gold bull market in the beginning of 1980.
Stick around, long term fiat US dollar gold and silver price projections are coming up next.
All fiat currencies by design lose value to gold bullion over time. The question we are tackling here is the coming final loss of fiat currencies to gold, and how drastic nominal price highs might climb. The dollar since 1970, has already lost over -98.5% of its value to gold bullion. We're looking out at that final -1.5% loss and what it means for long term bullion holders.
Since the start of 1970 the gold spot price has run from $35 oz to now over $2,300 oz, more than 67 fold. To repeat something akin by the year 2078, the fiat US dollar gold price would be nearly $160,000 oz. It is unlikely the current unipolar dominant US dollar reserve currency post Bretton Woods system lasts in the coming decades, and in the changes to come it is likely the spot US dollar gold price will revalue sharply higher and faster than it perhaps ever has prior.
Since the start of 1970 the spot silver price has run from $1.80 oz to a still ancient nominal high of $50 and back down to where silver's building bull market of today is spot priced at the moment, near $30 oz.
The spot gold silver ratio is still around a historically high level of 77, with the longer term target in a bullion bull market mania aimed at eventually again falling below the low 30s last seen during the early 2011 silver price run to $50 oz.
Silver bullion bulls like myself are making a long term bet that silver relative value versus gold this decade into next will tighten and for some duration silver will vastly outperform gold as it did in the late 1970s and early 2010s.
Ignoring the coming long term fiat currency gold and silver price target levels for a moment, in the real world what we are talking about is both gold and silver respectively buying way more in terms of other asset classes like US stocks or median real estate as the bullion bull market goes into a blow off euphoria phase future.
There remains a current very real possibility of gold bullion owners today eventually being able to buy 10Xs more S&P500 stocks than they do at the moment.
A similar potential for silver bullion owners being able to buy way more of the S&P500 in the eventual rollover of this chart back beyond the 2011 lows and back towards levels last seen during the 1970s.
Finally we move to the long term gold and silver price targets for 40% coverage of US Official Gold Reserves versus outstanding unbacked fiat US dollar supplies outstanding.
This data is only measuring the domestic USA fiat US dollar currency supply in circulation data. The fiat monetary base is simply counting the hard US dollar cash notes outstanding in the US domestic economy.
The amount of fiat US dollars being held offshore dwarfs the domestic fiat US dollar supplies, after all, the fiat US dollar is our most successful export by far and away.
Just to merely see history rhyme in the domestic United States, where it already occurred 3 other times last century during structural resets and crisis in fiat currency confidence.
We at the moment need the spot gold price at $8,758 oz to cover 40% of the fiat US dollar monetary base printed and outstanding. If the spot gold silver ratio were at 30 during such a rampant move in spot gold we're talking about a spot silver price nearly $300 oz.
But we all know that most so-called money or fiat US dollar in circulation today are in digital form sitting in demand deposit accounts at banks and other financial institutions. And since Covid 2020, the fiat US dollar M1 supply has also counted savings deposits including money market deposit accounts as part of the domestic fiat US Dollar M1 supply count.
Well to get the spot gold back toward its last bullion bull market level era of near 1 to 1 on the bottom half of this chart, the spot gold price would need to nearly 8 fold from here without the fiat M1 supply growing further.
In order for the US gold reserves to be valued at 40% of currently outstanding domestic fiat US dollar M1 supplies we would need more than a 0 added to the current spot gold price and the spot silver price at a 30 GSR level would be threatening four figures in such a drastic scenario.
The bottom line of all this, is that a crisis in confidence globally is coming to the sovereign bond and fiat currency markets, in those coming waves bullion is poised to rise substantially higher in value and nominal price, the latter being most important to long term holders of physical gold and silver respectively.
Take advantage while you can acquire a prudent position in bullion like central banks are collectively doing in record size, simply knowing the long term trend will be our net wealth friend.
That will be all for this week's SD Bullion Market Update.
I'll be back next week with real time updates.
Until then, as always take great care of yourselves and those you love.
