The Rise of Gold: Why Analysts Predict It Could Reach $8,900 by 2030?

As the global political and economic order continues to be turbulent, gold is returning to the heart of the capital markets. A recently released annual report on gold investment provides an in-depth analysis of the new round of financial restructuring that the world is currently undergoing and the strategic value of gold as an unrivaled, non-inflationary monetary asset. From the deindustrialization of the United States and the runaway fiscal deficit, to the rise of non-state credit assets such as Bitcoin, to the large-scale gold purchases by central banks, these trends together form the background of the "gold majority" pattern.

Gold Rush: Returning from the Margins to the Center Stage

The current gold bull market can be seen as the opposite of the movie "The Big Short": in the context of the global financial and monetary system restructuring, strategically investing in gold will bring substantial returns. As Richard Russell said, "No frenzy can compare to the gold frenzy."

For a long time, gold has been marginalized in the Western financial system, seen as lacking returns and regarded as an outdated safe-haven tool. However, in recent years, the situation has begun to change. This trend, known as the "Great Bull Market," symbolizes a long-term bull market for gold and reveals a reassessment of systemic risks in the capital markets.

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In this environment, investors are faced with several key issues:

• Do sovereign bonds still have a hedging function?
• Has the dollar hegemony come to an end?
• Is the valuation of "MAG 7" tech stocks too high?
• Is gold already too expensive?

Traditional views suggest that the price of gold is high and there is little room for upward movement. However, the report indicates that we are currently in the middle stage of a bullish trend for gold, rather than at the end.

Current Status of the Gold Market

According to Dow Theory, a complete bull market can be divided into three phases: Accumulation Phase, Public Participation Phase, and Mania Phase. Currently, gold is in the second phase, namely the "Public Participation Phase." Typical characteristics of this phase include:

• Media reports are becoming increasingly optimistic
• Speculative interest and trading volume rise
• New financial products are introduced
• Analyst raises price target

Over the past five years, global gold prices have risen by 92%, while the real purchasing power of the US dollar against gold has fallen by almost 50%. According to the forecast path of the "Golden Decade", the gold price trend is now close to the path of the inflation scenario, well above the baseline scenario.

Gold hit 43 all-time highs in dollar terms last year, second only to 57 in 1979, and 22 new highs this year as of April 30, the data showed. Although it broke through the $3,000 mark, this round of gains is still modest compared to the historical golden bull market.

Gold is not only breaking through absolute prices, but is also forming a technical breakthrough on a relative level (such as compared to stocks), indicating that a strong pattern relative to traditional assets has been established. For investors already invested in gold, continuing to hold is a wise choice, while for newcomers, entering the market now remains attractive.

It is worth noting that historical data shows that during a bull market, gold prices may experience a correction of 20% to 40%. Investors need to maintain a consistent risk management strategy to cope with market volatility.

New Investment Portfolio Allocation

The research proposes a new concept of portfolio allocation, which is a rethinking of the traditional 60% stock / 40% bond allocation:

• Stocks: 45%
• Bonds: 15%
• Safe-haven Gold: 15%
• Performance Gold: 10%
• Commodities: 10%
• Bitcoin: 5%

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This new type of portfolio reflects a view on the current market environment, particularly concerns over the loss of trust in traditional safe-haven assets such as government bonds. It is important to distinguish between safe-haven gold and performance gold, the latter of which includes silver, mining stocks, and commodities, assets that are considered to have significant potential in the coming years.

Key Factors Influencing Gold

Geopolitical Restructuring

The global geopolitical landscape is accelerating its restructuring, which is favorable for gold. The world is transitioning from "the gold-backed Bretton Woods era, to Bretton Woods II backed by internal currencies (U.S. Treasuries with unhedgeable confiscation risks), and then to Bretton Woods III backed by external currencies (gold and other commodities)."

Gold has three major advantages as the anchor of a new monetary order:

• Gold is neutral, not belonging to any country or political party, and can become a unifying element in a multipolar world.
• Gold has no counterparty risk; it is pure property, and the state can easily resolve confiscation risks through domestic storage.
• Gold has high liquidity, with an average daily trading volume exceeding $229 billion in 2024, sometimes exhibiting higher liquidity than government bonds.

Impact of US Economic Policy

After Trump returned to the White House, he initiated a profound restructuring of the U.S. economy and the global economy. His policy directions include:

1. Solve the problem of government over-indebtedness:

• The departmental optimization and government efficiency program originally aimed to save $1 trillion each year, which is about 15% of Washington's expenditures.
• Recent expectations have been significantly lowered, and the potential savings mentioned now stands at $155 billion.
• The United States now pays over $1 trillion in national debt interest annually, exceeding its defense budget.

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2. Trade Policy Reform:

• The new tariff policy raises the average tariff in the United States to nearly 30%, significantly higher than the approximately 20% during the Smoot-Hawley Tariff Act of 1930.
• The data shows that the U.S. is about three times more dependent on Chinese inputs, and considering that China's manufacturing base is also three times that of the U.S., suggesting that China may be in a better position in this trade conflict

3.US Dollar Policy:

• Policymakers believe that the high value of the dollar is one of the main reasons for the deindustrialization of the United States, and plan to significantly devalue the dollar.
• At the same time, we hope to maintain the status of the US dollar as the global reserve, trading, and settlement currency.
• There have been statements threatening to impose high tariffs on countries that wish to replace the US dollar as a trading currency.

These policies may lead to a slowdown in the U.S. economy, or even a recession. According to economic indicators, signs of contraction have already begun to appear in the U.S. economy. If this trend continues, the central bank will face greater pressure to loosen monetary policy more aggressively than current pricing suggests.

Changes in European Monetary Policy

Europe, especially Germany, has seen a significant shift in fiscal policy. The candidate expected to become Germany's next chancellor has proposed exempting defense spending exceeding 1% of GDP from debt rule restrictions and creating a €500 billion debt financing plan for infrastructure and climate protection. Predictions show that Germany's national debt will rise from 60% of GDP to 90%.

This marks a historic moment for Germany: under the leadership of the Conservative Party, it has officially abandoned fiscal conservatism. German government bonds reacted noticeably, experiencing the largest single-day fluctuation in 35 years after the announcement.

central bank demand

Central bank demand is a key pillar for the "bullish" trend. Since 2009, central banks have been net buyers in the gold market, a trend that has significantly accelerated since February 2022 when Russian currency reserves were frozen. For three consecutive years, central banks have increased their gold reserves by over 1,000 tons.

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As of February 2025, global gold reserves reached 36,252 tons. In 2024, gold's share of monetary reserves reached 22%, the highest level since 1997, more than double the low point of about 9% in 2016. However, there is still a long way to go from the historical peak of over 70% in 1980.

Central banks in Asia account for the majority of these purchases, but Poland is the largest buyer in 2024. It is worth noting that, despite China's heavy purchases in recent years, its share of official gold reserves is only 6.5%. In contrast, the United States, Germany, France and Italy have more than 70% of their reserves. Russia, for its part, increased its share from 8% to 34% between 2014 and the first quarter of 2025.

Research suggests that China will continue to purchase gold at a rate of approximately 40 tons per month, meaning that the demand from the People's Bank of China will approach 500 tons annually, accounting for nearly half of the total demand from central banks over the past three years.

The legal currency continues to depreciate

Gold's monetary function is different from that of fiat money, and its supply cannot be expanded arbitrarily. Since 1900, the U.S. population has grown 4.5-fold (from 76 million to 342 million), while the M2 money supply has increased 2,333-fold (from $9 billion to $21 trillion) and more than 500-fold per capita (from $118 to over $60,000). This condition has been likened to "bulging muscles in steroid athletes – impressive in appearance but fragile in structure".

The growth of the money supply is a long-term key driver of gold prices. In G20 countries, the average annual growth rate of M2 is 7.4%. After experiencing three years of sometimes negative growth, the money supply is now growing again, which will become another driving factor for the "big bull".

Gold as portfolio insurance

Gold performs exceptionally well during economic downturns and bear markets. Analysis of 16 bear markets from 1929 to 2025 shows that in 15 of these bear markets, gold outperformed the S&P 500, with an average relative performance of +42.55%.

The study compares gold to the Italian defensive tactic "catenaccio" in football, characterized by its reliable defense and safety. When other investments are volatile, gold stabilizes the portfolio with predictable resilience.

Shadow Gold Price

"Shadow Gold Price" ( SGP ) refers to the theoretical gold price when the base currency supply is fully supported by gold. Calculated according to the current market price:

• If the US dollar M0 is fully backed by gold, the price of gold would need to reach $21,416.
• If the Eurozone's M0 is fully backed by gold, the price of gold would need to reach approximately 13,500 euros.
• If the US M2 is fully backed by gold, the price of gold would need to reach $82,223.
• If the Swiss M2 is fully backed by gold, the price of gold would need to reach 29,101 francs.

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Historically, partial coverage has been the norm:

• The Federal Reserve Act of 1914 stipulated a minimum gold coverage ratio of 40%, which requires the gold price to rise to $8,566 to meet this requirement.
• From 1945 to 1971, a coverage of 25% was required, and the corresponding shadow gold price of M0 is $5,354.

If the money supply of the major currency areas (the United States, Eurozone, the United Kingdom, Switzerland, Japan, and China) is covered by the central banks' gold reserves in proportion to their share in global GDP, the estimated gold prices under different coverage rates are:

• M0 25% coverage: $5,100
• M0 40% coverage: $8,160
• M0 100% Coverage: $20,401
• M2 25% coverage: $57,965
• M2 40% coverage: $92,744
• M2 100% Coverage: $231,860

Currently, the U.S. monetary base has a gold coverage ratio of just 14.5%, meaning that only 14.5 cents per dollar is made up of gold. During the gold bull market of the 2000s, the Monetary Base's gold coverage increased from 10.8% to 29.7%. To achieve similar coverage, the price of gold would need to almost double to more than $6,000. Historically, gold coverage reached over 100% in the 1930s, 1940s and 1980s, with a recorded value of 131% in 1980 equivalent to the current gold price of around US$30,000.

Gold Price Prediction

Price Model Prediction:

• Basic Scenario: By the end of 2030, the gold price is approximately $4,800, with a mid-term target of $2,942 by the end of 2025.
• Inflation Scenario: By the end of 2030, the gold price is approximately $8,900, with a mid-term target of $4,080 by the end of 2025.

Currently, the price of gold has exceeded the mid-term target of $2,942 for the basic scenario by the end of 2025. Analysis suggests that by the end of this decade, the price of gold is likely to fall between two scenarios, depending on the level of inflation over the next five years.

Inflation Risk Analysis

Research warns that the possibility of a second wave of inflation, similar to that of the 1970s, should not be excluded. The current developments are shockingly similar to the inflation trends of the 1970s.

In the short term, analysis still mainly sees a deflationary trend, especially due to the significant drop in oil prices. The notable appreciation of currencies of leading industrialized countries against the US dollar has further strengthened the deflationary effect in these countries.

However, this does not mean that the inflation risk has been eliminated. Despite the deflationary effects of recessions and capital market crashes, the policy response is likely to be highly inflationary. A strong reaction from the central bank seems to be only a matter of time. Possible measures include yield curve control, a new round of quantitative easing, financial repression, further fiscal stimulus, and even MMT or helicopter money.

Quantitative analysis shows that in a stagflation environment, gold, silver, and mining stocks perform exceptionally well. During the stagflation period calculated in the report, the annualized real compound growth rate for gold was 7.7%, for silver it was 28.6%, and in the 1970s, these figures were 32.8%, 33.1%, and 21.2%, respectively.

Investment Opportunities in "Performance Type Gold"

Even as gold slowly returns to the spotlight, the large-scale gold rush of Western financial investors remains distant: in the first quarter of 2025, gold ETFs recorded an inflow of $21.1 billion, the second highest in history. However, due to the significant rise in gold prices, this inflow in tonnage terms is only the tenth highest quarter in history.

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At the same time, the capital inflow into gold ETFs is still far lower than that of stock and bond ETFs, with stock ETFs attracting 8 times the capital inflow of gold ETFs, and fixed income ETFs attracting 5 times that of gold ETFs.

Looking back at the performances of the 1970s and 2000s, silver and mining stocks have significant catching-up potential in the current decade. Market dynamics show that gold typically leads the upward trend, followed by silver, mining stocks, and commodities, resembling a relay race pattern.

Bitcoin and Gold

Bitcoin may benefit from the current reorganization of the world order. Against the backdrop of escalating geopolitical tensions, the advantages of Bitcoin as a decentralized cryptocurrency are becoming increasingly evident. Due to its independence from national control and its ability to facilitate cross-border transactions, Bitcoin indeed provides an alternative to traditional currencies.

As of the end of April, the market value of all mined gold is approximately $23 trillion (217,465 tons, priced at $3,288 per ounce). In contrast, the market value of Bitcoin is around $1.9 trillion, which is about 8% of the market value of gold.

Analysis suggests that by the end of 2030, Bitcoin could reach 50% of the market value of gold. Assuming a conservative gold price target of around $4,800, the price of Bitcoin would need to rise to about $900,000 to achieve 50% of the market value of gold.

It is worth noting that the emergence of competitors to gold in the non-inflation asset space is not necessarily a disadvantage. According to the "competition stimulates business" idea, more and more investors may realize that a combined investment in gold and Bitcoin offers better risk-adjusted returns than investing in either one alone: "gold provides stability, while Bitcoin offers convexity."

Market Comparison and Potential Risks

Comparing various macro and market indicators from 1980, 2011, and the present confirms that there is still room for gold prices to rise. Notably, the current significantly higher dollar index is far above the level at the last historical high for gold.

Despite the long-term upward trend being intact, the following factors may lead to short-term adjustments:

• Central Bank as a Key Risk: The unexpected decline in central bank demand from the current average level of 250 tons per quarter may reduce structural demand.
• Investor Deleveraging: The pace of reduction in speculative positions may be rapid.
• Geopolitical Premium Decrease: A significant reduction in geopolitical premium will occur with the easing of major conflicts or a swift end to trade wars.
• U.S. Economy Stronger than Expected: A robust U.S. economy may prompt the central bank to tighten policies.
• Technical and Emotion-Driven Risks: Excessively bullish sentiment, with positions being extreme in certain cases.
• Strengthening Dollar: The dollar is short-term oversold, with extremely negative sentiment.

In the short term, the price of gold may pull back to around $2800, or even experience lateral consolidation. This adjustment may be part of the consolidation process of the bull market and will not pose a threat to the medium- to long-term upward trend of gold.

Conclusion

The gold bull market has not yet ended and is currently in the mid-stage of public participation. Gold is transforming from being viewed as an outdated relic to a key asset in investment portfolios, providing both defensive stability and offensive potential. In a sense, gold is like the "Michael Jordan" of the asset world, stable in defense and powerful in offense — a true game changer.

The long-term rise of gold is based on several mutually reinforcing pillars:

• The global financial and monetary system is inevitably restructuring in the face of profound political and economic turmoil.
• Government and central bank's inflation tendency
• The rise of regional economies with an affinity for gold, particularly in Asia and the Arab world
• Capital is transferred from US assets (USD, US stocks, US Treasury bonds)
• Expected excess returns of "performance gold" (silver, mining stocks, and commodities)

The recent rise in gold prices may not only reflect a crisis but could also be a precursor to a "black swan moment": amidst the whirlpool of global turmoil, gold has emitted a rare but extremely positive signal. As the credibility of the existing monetary system declines, the possibility of gold regaining its traditional role as a monetary asset is increasing, likely to appear in the form of supranational settlement assets—not as a tool of political power, but as a neutral, debt-free basis for trade, exchange, and trust.

As traditional safe-haven assets like government bonds lose trust, gold is becoming a core element of long-term investment strategies once again. In turbulent times, gold has proven itself to be a reliable safe-haven choice.