Over the past decades, the price of gold has been increasing. Will the rise of gold continue?
Let’s examine the international situation, the global economy and the prospects of gold with the help of financial experts.
1. The rapid development of Asian countries
Bloomberg analysts believe that China will be the largest economy in the world by 2030, followed by India, outstripping the United States.
According to estimates of the World Gold Council*, 170 million people in Asia will be joining the middle class annually. India can achieve great success too: if the country succeeds in implementing ambitious economic reforms, its middle class can make up 73% of the population by 2030 instead of the current 19%.
In the chart: top 10 countries by GDP* in 2030.
Asian countries are the major consumers of gold in the world. China and India account for more than half of the global demand for gold largely due to the development of the economy and the growth of welfare. According to research conducted by the Australia and New Zealand Banking Group, the demand for gold in Asia will double by 2030.
2. Unstable international environment
According to analysts of the World Gold Council, we will witness an unprecedented shift of economic power from the West to the East. As a result, geopolitical tension and competition between the world powers will increase: the economic sanctions and confrontations of the United States, China, Russia and the European Union serve as a prime example of this calamity.
In conditions of social, economic and political instability, both governments and ordinary people show greater interest in gold. The central banks of many countries buy up gold with unprecedented activity. If the international situation escalates, more people will turn to gold as a safe haven in turbulent times.
3. The introduction of advanced technologies
Technological progress enters all spheres of life. The World Gold Council emphasizes key upcoming trends:
The development of the Internet of things (IoT)* — basic household items will have access to the global network.
The growing popularity of electric cars and hybrid vehicles.
The increased demand for solar panels.
All these technologies have one thing in common: gold is a key component of the technological production. There is reason to believe that the need for the precious metal will increase in the technical industry.
4. Decline in gold mining
The number of accessible gold deposits in the world declines, while the operating costs are too high. According to estimates of the consulting company Metals Focus, in order for a new gold mine to be profitable, the price of gold must be at least $1,500 per ounce.
The World Gold Council predicts a decline in gold mining production over the next 30 years. This fact, combined with the growing demand for gold, may cause gold deficit. The current situation should have a positive impact on the price of gold.
In the chart: gold mining in South Africa — one of the leading countries in the industry demonstrates a negative trend of the national gold output.
Gold in 2030: expert view
Everett Millman, a gold expert at Gainesville Coins:
“Three factors of uncertainty will be in favor of gold: unpredictable monetary policy, continuation of the geopolitical rivalry and problems with gold mining. The price of gold will probably amount to $1,500-$1,700 per ounce by 2030.”
Brian Whitfield, President of Pacific Coin Exchange:
“This is a turbulent time for the dollar, and the situation will only get worse. I think there is no better time to buy gold than now. I suppose the price of gold can reach $3,000-$5,000 per ounce in ten years.”
Moe Zulfiqar, a financial analyst at Lombardi Letter:
“There are a lot of events happening in the world that could boost the price of gold in the next decade: unreasonable government spending, gold purchases of national banks, depletion of gold deposits and much more. So, it’s not surprising if the price of gold increases up to $5,000 per ounce by 2030.”
On June 3, 2019, the price of gold is $1,311 per ounce.
It is impossible to determine what will exactly happen to the global economy in a few years. However, the ongoing processes hold promise for gold. History has repeatedly shown that the noble metal can withstand any turmoil, and its valuable properties do not lose relevance.
By purchasing gold today, you make a contribution to your future. Gold will protect savings from inflation, becoming a profitable long-term investment and a guarantee of Financial Security.
*Trend — a general direction in which a process is developing or changing.
*GDP (Gross Domestic Product) — an economic indicator showing the total value of all goods and services produced in a country.
*The World Gold Council — the market development organization, founded by the world's leading gold producers to stimulate demand for gold.
*The Internet of Things (IoT) — the extension of Internet connectivity into physical devices and everyday objects that people frequently use. For example, a refrigerator may determine whenever a food item needs to be replenished and order it online.