A lot of people make big gold price predictions, but they rarely have a tangible justification for why they think gold can hit price ‘X’ by time ‘Z’.
So here’s at least a relatively tangible piece of data that can support $2,500 gold, shown to the right in a chart from the Wall Street Journal.
Gold may have had a wild run over the last 8.5 years, but past bubbles such as that of the Nasdaq or U.S. housing have been able to more than double afterward. Thus gold at just under $1,200 could just over double to $2,500 within two years if it acts like these previous bubbles.
Don’t forget Soros likes gold because he sees it as ‘the ultimate asset bubble’. If he’s right, then gold bulls will be happy even if they think gold isn’t a bubble right now.
In any case, the chart simply supports the notion that $2,500 feasible in the next two years, we’re not saying one should bet on it as the most probable outcome.
Defensive consumer staples might be a safer option for long-term capital preservation, less prone to the risk that a bubble has already formed for the asset class.
Note this chart was taken from the first of a three part series by Brett Arends at the WSJ. Check it out here.
(Tip via Abnormal Returns)