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Gold prices have been on a tear since Bitcoin fell $4,300 from its all-time high of more than $19,000 in mid-December.
Since Dec. 11, the price of an ounce of gold has climbed from $1,242 to $1,313 today (Jan. 9), for a gain of 5.72% over one month.
And this run-up is just the beginning to a gold bull market.
In fact, Money Morning Resource Specialist Peter Krauth believes gold prices will rise to $5,246 by 2020. That implies a profit opportunity of 300% from current levels.
Usually, investors flee to gold as a safe haven from market uncertainty and political turmoil. And with the stock market hitting record highs, many investors have looked past gold.
But Krauth sees three major catalysts pushing gold prices higher over the next several years.
Here's what will drive gold prices up to $5,246 by 2020…
Gold Prices Catalyst, No. 1: Rising Inflation
Rising inflation will drive the price of gold higher in 2018.
Inflation is the rate at which the price of general goods and services increases. As the inflation rate rises, the purchasing power of the U.S. dollar decreases.
Right now, inflation stands at 1.7%, its second-highest level in the last five years. And as the stock market continues to climb higher, so will the inflation rate.
That's why the U.S. Federal Reserve manages inflation by raising interest rates. This has kept inflation from rising too quickly, even as the economy grows.
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But there's been a growing sense of uncertainty among investors as the stock market keeps hitting record highs. This often convinces people the economy is growing unstable, which can cause investors to exit the stock market.
Since assets like gold are considered safe havens during times of economic uncertainty, gold prices will rise as people protect themselves.
And that's only the first reason we're raising our gold price forecast…
Gold Prices Catalyst, No. 2: Fewer Short Bets
Reduced short selling – or traders betting prices will fall – in the gold market also indicates the price of gold will rise over the next three years.
Over the last year, the number of short positions on gold stocks has fallen. One indicator of short interest is the Gold BUGS Short Index (NYSE: HUISH). This index tracks short selling on mining firms that specifically refuse to cut gold production based on gold price movements. In the last 12 months, HUISH has dropped 9.27%, indicating short interest in the broad gold sector is falling.
This shows a shift in sentiment from bearish to bullish for gold.
Canadian gold mining company NovaGold Resources Inc. (NYSE: NG) shows an even starker change in sentiment. In the last six months, the volume of short bets on the stock declined 32.75%, from 19.05 million shares to 12.81 million.