Jun 4, 2025

Stay the course because gold still has plenty of potential - Incrementum’s In Gold We Trust

Kevin

GoldPrecious Metals

While gold has seen an impressive run this year, with prices rallying to a record high of $3,500 an ounce, its long-term bull rally is still in the early stages and on track to see higher gains in the second half of this decade, according to one investment firm.

 

In the annual In Gold We Trust report, published Thursday, the research team at Incrementum AG, led by fund managers Ronald-Peter Stöferle and Mark Valek, reaffirmed their long-term gold forecast for prices to hit $4,800 an ounce by 2030. However, because of the current environment and growing inflation threat, the team also sees a bull-case scenario where prices rise to $8,900 by the end of the decade.

 

"Since the beginning of the year, the impulsive bull market has already pushed the gold price closer to the inflationary scenario's projection path than to that of the base scenario," the analysts said.

 

Incrementum initially published its long-term gold price forecast in 2020, warning investors that central banks would struggle to keep inflation down as government debt rose. At the same time, the investment firm saw potential for the precious metal to reassert itself as an important monetary asset.

 

Now, five years into their forecast, Stöferle and Valek said there is no reason to deviate from their initial conviction, as gold is just starting to be recognized among generalist investors. The analysts pointed out that in the last five years, gold prices have risen by 92%, but the asset still represents only about 1% of broader investment portfolios.

 

"We are now witnessing how a secular bull market is slowly becoming mainstream. The public participation phase – also known as the big move phase – is the second of three phases in a bull market according to Dow Theory. This longest and most dynamic bull market stage is characterized by increasingly optimistic media coverage," the analysts said. "In our opinion, we are currently in the midst of this phase, which will ultimately lead to a final mania phase."

 

While central bank demand has been a significant factor in the gold market—driving prices higher and providing solid support at elevated levels—Incrementum expects that investment demand will become an important driving force as investors look to hedge against rising inflation and persistent geopolitical and economic uncertainty.

 

"Even though gold is slowly coming back into the spotlight, the big gold rush of Western financial investors is still a long way off," the analysts said. "Current inflows into gold ETFs continue to lag far behind those of equity and bond ETFs."

 

Incrementum notes that renewed investor interest in gold comes as the U.S. government continues to push the economy closer to a recession by implementing strict austerity measures. Government officials have described these measures as a necessary detox to reset the economy.

 

Whether or not the government maintains its austerity measures, Incrementum noted that slower economic growth will put pressure on the Federal Reserve to ease interest rates, which should provide a tailwind for gold.

 

Added to the economic turmoil is the ongoing trade war, as President Donald Trump tries to implement a new global trading regime that would devalue the U.S. dollar while still maintaining its role as a reserve currency.

Incrementum noted that the U.S. government's stance on the 

dollar poses significant risks for the global economy but would be extremely supportive for gold.

"Artificially weakening the US dollar to promote reindustrialization would be a grave mistake. Currency devaluations do not solve structural problems. They generate inflation, make imports more expensive, reduce the purchasing power of wages and savings at home and abroad, and thus weaken domestic consumption, the backbone of the US economy," the analysts said.

 

The analysts also noted that the government's weak-dollar stance could impact the currency's trustworthiness and end up scaring much-needed capital away from the economy.

 

"Instead of relying on the deceptive advantages of a weaker U.S. dollar, U.S. economic policy should focus on fiscal discipline, a streamlined bureaucracy, and targeted promotion of innovation to attract new industries and strengthen existing ones," the analysts said. "To put it bluntly, if a soft-currency policy were the key to economic success, Zimbabwe would top the list of the most successful countries, not Switzerland."

 

In this environment, the analysts said that gold continues to represent a stable anchor.

 

While Incrementum continues to see long-term potential for gold, the analysts also said investors should expect some volatility. In the near term, they said it would not be surprising to see gold prices test support at $2,800 an ounce.

 

"A secular bull market is never without setbacks. Corrections of 20, 30, and even up to 40% have been observed several times in previous bull markets," the analysts said.

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