Old thread but anyway my 2¢
Too bad this is an old thread because I invest in physical gold and have been following the price action for many years.
A brief outline: As you may or may not know, gold was once the world’s money. However, the last link to any form of gold standard was broken when President Nixon ended the convertibility of $US into gold in 1971 (The Nixon shock) thus ending the Bretton Woods system. Since then the world has been on a completely fiat monetary system with the $US maintaining its place as the reserve currency. Even though the world is on a fiat standard the price of gold still has a very close relationship to the money supply, especially the $US, as all commodities are priced in $US.
Since the GFC in 2008 the worlds Central Banks have literally been flooding the world with newly created money via their low interest rate policies and Q.E. in an effort to avoid their greatest nemeses – deflation (I say “their” because as consumers we enjoy falling prices.)
The $US officially ended it’s loose monetary policy in December 2015 when it hiked interest rates for the first time since 2006. This seems to have also marked the bottom of the gold bear market. The theory is that we are now entering an inflationary period and gold performs well in that environment.
I personally think we are now in a new bull market and should see prices rise about 7% p.a for at least the next decade, with a possible bubble taking it close to $5000 t.oz sometime in that period.