Ben Mountifield writes the highly acclaimed Mountain Investor Report.

  • Ben Mountifield provides critical analysis of economic events and market trends.
The price of gold has risen for eleven years in a row, producing an average annual return of 17.7 per cent, with no down years. Despite this, however, gold’s recent fall from its September high of $US1923 an ounce to around $US1680 at time of writing has led many analysts to conclude that the gold bull market is over. This is not an opinion I share. The factors driving gold persist and are likely to do so for many years to come. It is my opinion that in the next three to five years gold will reach $3000 to $5000 an ounce, and possibly much more.

From bear to bull

After reaching a peak of $850 an ounce in January 1980, the price of gold entered a multi-decade bear market, finally bottoming at $255.95 an ounce on 2 April 2001. Since then the price of gold has risen every year, although for those holding gold it has not always been an easy ride.

A history of violence

The gold market has a history of violent moves and 2011 was no
exception. Between 1 July and 6 September 2011, the price of gold shot up from $1478 an ounce to an all-time high of $1923, a rise of over 30 per cent. This near-parabolic rise was followed by an equally violent fall. By 26 September gold had fallen more than 20 per cent to $1535, and investors’ nerves were tested again just a few weeks later when gold fell from $1804 to $1523.