Gold’s Hidden Upside: Here’s What Inflation Really Means for the Shiny Metal

by | Apr 16, 2024

This article is Part 2 of a series on the massive shift taking place with gold right now. You can read the other parts here: Part 1, Part 3, Part 4.


Last week, we dove into gold’s recent surprising surge. We explored how gold went from a “boring asset” to experiencing one of its sharpest price spikes in history.

This dramatic rise can be partly attributed to the erosion of the US dollar’s value since it went off the gold standard in 1971. Remember, back then a dollar could buy you a burger, fries, and a Coke!

Today, inflation has significantly weakened the dollar’s purchasing power. 

But hold on a second, gold bugs. Before you run out and buy all the gold bars you can find, let’s talk about inflation’s other side of the coin — its impact on gold prices themselves. 

Here’s a mind-bender: if you adjust the price of gold for inflation since the 1980s high of $850 an ounce, it would actually translate to around $3,590 in today’s dollars.

That means, even with the recent surge, gold’s price hasn’t necessarily skyrocketed as much as the headlines might have you believe. 

This highlights a crucial point: gold may be a hedge against inflation in the long run, but it’s not immune to its effects entirely. Inflation can push the price of gold higher, sure, but gold needs to outpace inflation to truly deliver exceptional returns.

Here’s another interesting twist: Traditionally, gold has made up around 5% of global assets. Think of it like a diversified portfolio where a slice of your pie is allocated to gold. But guess what?

Right now, that slice is more like a sliver, at just around 0.5% of global assets. 

This means two things:

1) First, there’s potentially a lot of room for gold to grow in terms of investor allocation. If investors flock back to gold as a safe haven, its price could rise significantly.

2) Secondly, it also suggests there’s a chance we might be in the early stages of a much larger gold bull run.

So, the story with gold is a bit more nuanced than just “shiny metal goes up.” 

Inflation does play a role, but it’s a complex one.

Here’s the takeaway: while gold’s recent price surge is exciting, it’s important to consider inflation-adjusted figures and the potential for further allocation by investors.

Buckle up, because this gold story could have a lot more chapters to come!

As for Jeffry, he’s told us that prices of $3000 and even $5000 per ounce are reasonably in the cards.

And in the longer term, he’s looking at prices that could make your eyes pop out of your head — think multiple tens of thousands per ounce.

It’s not just a guess on his part — as he always tells us, “it’s in the charts.”

Stay tuned…

— The Jeffry Turnmire Trading Team

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