How High Could Gold Prices Go? Expert Market Analysis & Projections

When we first made projections about the expected performance of gold for 2024 and beyond, it was a conservative estimate to suggest gold should average 12% or more per year for the next decade. These estimates today are on the low end for gold, with new forces at play taking gold much higher in the years ahead.

Today, we will update these projections and explain why 12% per year is likely too conservative for the conditions developing in the marketplace today.

But when we consider several factors developing geopolitically and in the precious metals arena globally, we may be at the start of a 5-year super-cycle for gold. There are periods throughout history when gold averaged 20-44% per year for 3-5 years.

These periods were marked by high inflation, recession, political instability, and changes to the financial world order.  If you were to say, “That sounds like conditions we are seeing today,” you would be correct. This is why gold has risen over 30% in 2024 and may continue similarly for several years.

AI, Technology, and Gold 

The World Gold Council projects an increasing demand for gold in the technology sector due to the continued expansion of “Artificial Intelligence” (AI) into nearly every facet of modern life.  As AI continues to grow, so will the need for gold. Gold is essential to modern technological devices such as smartphones and electronic medical devices.  

Gold is a great conductor of electricity, is malleable enough to fit into tiny spaces in various shapes, and doesn’t deteriorate due to humidity or temperature fluctuations.  

Gold also doesn’t respond to bacteria or mold and retains its ability to conduct electronic signals, which usually last longer than most devices. AI requires increasing amounts of electronic circuits and gold to make them work.  Sometimes, silver or copper can serve as a substitute, but most of those substitutions have already been made where they can be.  There’s nothing like gold when it comes to technology.

Other factors influencing gold’s rise include central banks worldwide purchasing gold at a continuing record pace. Analysts at Goldman Sachs believe central bank demand alone could cause gold prices to reach $3,000 by next year.

I believe that is a conservative estimate, considering additional things happening today. The lead commodities analyst at Wisdom Tree also discusses the global trend of de-dollarization of reserves, leading to higher gold demand and prices in the coming years. Much of this demand worldwide stems from the financial warfare that accompanies the shooting war going on in Russia, Ukraine, and the Middle East.  

Many nations are replacing US Treasury bonds and dollars with gold, as the US government cannot sanction or confiscate gold that nations possess. Gold is increasingly being used to facilitate trade internationally, and it will continue for several years.

The Texas Connection

However, it is not only internationally that gold is playing an increasing role.  State lawmakers in Texas have recently proposed a gold-backed cryptocurrency to help the general public have more confidence in using electronic “money.”  

You cannot make a crypto or ” gold-backed ” currency without gold. Texas also created the first state-owned precious metals vault, administered by the parent company of the United States Gold Bureau.  Texas is helping lead a movement across the United States that is bringing gold back to the forefront domestically, as other states are beginning to take similar steps.

Even asset managers are warming back up to holding or recommending gold as an asset class to include in the average portfolio.  It used to be that 5% of investment assets were held in gold. Today, that number is approximately 0.5%, but it is beginning to move back toward historical allocations.  

Among the few financial analysts who recommend owning gold, the standard recommendation used to be a 5-10% allocation to gold.  However, recent analysis shows that most portfolios would perform more consistently with a 14-18% allocation to gold. As this investment knowledge spreads, we can expect gold to become an increasing part of the average American investment portfolio.  This increased demand will also help propel prices higher.