Gold may not be as volatile as other financial assets, but it has proven to hold value over time. This is why it has retained its position as the number one store of value for millennia. For context on how gold can hold value, consider that in September 2018, gold was trading at $1187.17. As of March 2022, gold was trading at over $2000. That’s a price increase of 68% for anyone who chose to hold through this period.
That said, gold has ups and downs driven by broader market fundamentals. Gold tends to do well when investors expect equities and other conventional assets to underperform. In 2018, investors increasingly felt that the markets had peaked and were set for a correction. The fears were confirmed this year following the war in Ukraine and rising inflation. For most of July, gold prices have been trending lower, an indicator that investors expect the financial markets to make a rebound.
With this background in mind, what are the most realistic gold price predictions for next 5-years? Before making any predictions, it is important to acknowledge that no one can accurately predict the future. That’s why this warning always follows almost all financial analyses, “past performance is not an indicator of future performance.”
However, there are factors that you can consider and determine the overall direction that gold can take going into the future. Some of them are as below:
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Whether equity markets will be bullish or bearish
As mentioned earlier, gold prices tend to move opposite to the equity markets. The appetite for gold is usually low when equity markets are booming. The result is typically a drop in gold prices as investors abandon safety for returns. The reverse also holds true.
In essence, where gold prices will be in the next 5-years will depend on how the markets perform. If the equity markets are bearish at that time, then gold prices could see a massive rally in the next 5-years. On the other hand, if the markets are bullish and gaining momentum, then gold could underperform the broader market relative to its current prices.
One of the key factors that could play a role in the value of gold over the next 5-years is the geopolitical situation in this period. Gold prices have been rising for most of 2022, and it has a lot to do with the war in Ukraine.
If a similar situation erupts in the next 5-years, the uncertainties it would cause could trigger a rally in the price of gold. However, if the world finds itself in a situation of overall calmness and stability, gold prices could drop or flatline in this period.
That said, over hundreds of years, gold prices have been rising. As such, even though you be unsure of its price action in the short term, the odds are that it will keep going up in the long run.
Where to buy gold
Now that you know that gold is a good investment for the next 5-years, the next key thing to consider is where to buy it. To be safe, especially if you want to hold a gold trade for years, go for regulated exchanges. With such brokers, you have some assurance that they will be there over the years and that your money will be safe.
One of the best of them is LiteFinance. This is a regulated broker and has been in existence for years. Besides, signing up for a LiteFinance account is pretty straightforward.
It is impossible to predict gold prices with uncertainty over the next 5-years. That said, understanding the factors that drive gold prices makes it possible to increase your odds of success. The key thing to understand is that gold tends to do well when equities are underperforming and vice versa.