white and brown wooden staircase

The bull goes up the stairs

Is the gold bull market already over?

This is the question investors who deal with gold and gold shares are concerned with. Gold is in a consolidation phase after its all-time high in August 2020. Gold has not yet shown a clear direction and is trading rather sideways. Many are now asking: Is the gold bull market already over?

To answer this question, we must look at the dynamics that must be given for a gold bull market.

1. Past Bull Markets

Let’s first look at past gold bull markets. Chart 1 shows the gold chart back to 1971.

Chart 1: Gold Chart 1971-2021


In green, we see the bull markets, and in red the bear markets. What immediately stands out are the time periods of the gold bull markets. Gold bull markets go on for decades and contain ups and downs. Consolidation periods are not uncommon. So if we look at the bull market we are in today, we can see that it started around 2017. This means that just 4 years have passed. If we compare it to past bull markets, we can assume that we are still in the first half of the bull market.

2. Debt and Deficits

U.S. debt now stands at approximately $28.5 trillion (June 2021). Chart 2 shows the U.S. debt versus gold price.

Chart 2: U.S. Debt vs. Gold Price


As you can see, the U.S. debt has been rising steadily for over 40 years. We had a particularly steep increase in 2020 due to the Corona Pandemic. The chart also shows that as the debt increases, so does the price of gold. Since for the next few years the debt will continue to increase due to the infrastructure package, one can assume that the gold price will also continue to rise.

3. Quantitative Easing

Quantitative Easing (QE) is the process by which the central bank creates money out of thin air and injects it into the economy. To inject the newly created money into the economy, the central bank buys assets such as government or corporate bonds in return. This increases the money supply and keeps interest rates low in the long run.
Of course, one might think that QE is counterfeiting. On closer inspection, it is.
Since QE inflates the money supply and interest rates remain low, this can only have a positive effect on the price of gold. The Fed has emphasized the last few weeks again to stick to its strategy and continue with QE.

4. Real Negative Interest Rates

The real interest rate on the U.S. 10-Year Treasury usually goes in inverse correlation with the price of gold. When the real interest rate is negative, it is a very bullish sign for the gold price. Chart 3 shows the real interest rate on the U.S. 10-Year Treasury vs. the gold price.

Chart 3: Real Interest Rates vs Gold Price

Source: https://fred.stlouisfed.org/graph/?g=eiGR#0

You can see nicely, as soon as the real interest rates start to go negative, the gold price goes up. That means that gold is competing with other investment opportunities that guarantee annual losses. In the recent past, the Fed has always emphasized that it will probably not raise interest rates again until the end of 2022. If the Fed’s statement can be trusted, then we should still see rising gold prices at the end of 2021 to mid-2022.

5. Market Share of Precious Metals and Precious Metals Securities

For the past 30 years, U.S. retail investor market shares in this asset class have median around 1.5% to 2.0%. Today, the market share is less than 0.5%. If the above -debt and deficits, quantitative easing, and real negative interest rates – can get people to lift market shares back to 1.5% to 2.0%, then we could see gold prices well above the 2020 all-time high.


As we have seen, the dynamics for a gold bull market are all intact. As long as the dynamics are given, we can expect that the gold bull market is not over yet.

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