Gold’s Long-Term Upside Potential

The Gold Report spoke with Adrian Day about the ridiculous amount of government debt that will ensure the gold market remains on an uphill trajectory for years to come.

The Gold Report: Where are we in the current gold cycle?

Adrian Day: Over the last 250 years, the shortest cycle on record was the 1970s, just over 10 years. Typically, gold upcycles have lasted close to 40 years. On that basis, we aren’t even halfway through the current gold upcycle.

TGR: So last year’s price collapse did not indicate the end of the gold upcycle?

AD: Significant corrections in long, secular bull markets are typical. Gold, from top to bottom, has declined 37% in this particular cycle. If you look back to the upcycle of the 1970s, 1975–1976 saw a midcycle correction of 47%. But that was right before gold went up eightfold to more than $800/ounce ($800/oz).

Where are we now? It would be optimistic to assume a V-shaped recovery, but gold has bottomed, and over the next 12 months we are likely to see a slow, if uneven, recovery. The typical recovery comes from a long midcycle correction. We should reach $1,550–1,650/oz in 2014 or early next year, and then gold will start to accelerate. Some gold stocks could recover a lot quicker in expectation of higher prices.”

Read the Full Interview Here

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