World Gold Council Forecasts 5% Annual Gold Growth Through 2040

The World Gold Council recently published a report in which it stated that it expects gold prices to rise an average of 5% annually through 2040.

At a time when interest rates on Treasury bonds have dipped below 5%, and in which fears of recession are rising, that WGC report has caused people to take notice. But is this forecast realistic?

Key Points to Consider

• Gold prices have risen over 30% this year
• Gold’s annualized rate of growth since 1971 has been 8.4% per year
• While gold has had years of double-digit growth, there have also been years of double-digit losses

Gold’s Performance This Year

As of the time of writing, the gold price has risen over 30%. That’s pretty stellar performance, although rates like that may not be sustainable.

But gold’s price growth this year has made people sit up and take notice. Is this year a one-off, or can gold sustain more price growth in the future?

The Gold Price Over the Past Few Years

Since 2010, gold has had nine years in which it has gained in value and six in which it has lost value. Its three biggest years of growth before this year were 2010, 2020, and 2019, in which it gained 29.71%, 25.14%, and 18.3% respectively.

Its three biggest losses were in 2013, 2015, and 2021, in which it lost 28.04%, 10.52%, and 4.39% respectively.

So gold, like many other assets, can both lose and gain value. That’s not unique among any sort of asset.

What most people want to know, however, is how gold fares when they own it. Whether you’re planning to buy a few gold coins for a rainy day, or start a gold IRA to buy gold with your retirement savings, you want to know how gold will perform in your specific time horizon.

That time horizon might be 5 years, 10 years, 20 years, or even longer. So how does gold perform over the long term?

Gold in the 21st Century

If you didn’t take a close look at gold price data, you could be forgiven for thinking that gold is an underperformer. After all, the mainstream financial media likes to think of gold as a pet rock, a relic of a bygone era.

But did you know that gold has actually outperformed markets in the 21st century? Outside of perhaps cryptocurrencies, which have seen meteoric price gains, gold is one of the best performing assets of the 21st century.

That’s not news to anyone who has paid attention to gold prices over the past 25 years. But maybe, you’re thinking, this is an anomaly?

Gold Prices Historically

It’s important when looking at gold prices historically to remember that gold and the dollar were historically linked. The US dollar was defined as 25.8 grains of 90% pure gold, or 23.22 grains of pure gold, in the Gold Standard Act of 1900, which was equivalent to a gold price of $20.67 per ounce.

That definition changed over time as the dollar was devalued, most famously in 1934, when the dollar’s weight was changed yet again, so that an ounce of gold was now officially valued at $35 an ounce. That official valuation held until 1971, when President Nixon closed the gold window, suspending convertibility of gold and opening the door to the gold price being able to move freely on world markets.

Since that time, gold’s annualized rate of growth has been 8.4%. With that kind of growth rate over the past 50+ years, the World Gold Council’s call for a 5% annual growth rate in the future almost looks conservative in comparison.

Gold Prices in the Future

Wouldn’t it be nice to have a crystal ball and to be able to forecast what the future of gold prices will look like?

But since we don’t have one, we have to make our own informed decisions, using our knowledge of gold markets, and relying on insights from experts like the World Gold Council.

The WGC’s forecast for gold through 2040 may be completely wrong, either too high or too low. Only time will tell how far gold prices will rise.

During the stagflation of the 1970s, gold prices rose at an average annualized rate of over 30% over the course of the decade. That’s phenomenal growth by any measure, but could it happen again?

There are certainly some who think it could, like Jim Rickards who thinks that gold will hit over $27,000 an ounce, or Robert Kiyosaki, who thinks that gold could hit $15,000 an ounce.

And while those predictions may seem far-fetched, people back in 1971 probably couldn’t imagine that gold would increase nearly 15-fold by the end of the decade. Yet that’s just what it did.

All that goes to show that predictions and expectations can be all over the map, and aren’t necessarily going to be in line with each other. But if you think that the gold price is going to rise in the future, maybe it’s time to start thinking about adding gold to your portfolio.

Put Gold to Work For You

You can buy gold in numerous ways, from direct cash purchases to rolling over retirement savings into a gold IRA.

With a direct cash purchase, you have the advantage of being able to take delivery of gold at your home and hold it in your hands.

With a gold IRA, you have the advantage of a tax-free rollover of your existing retirement savings in 401(k), 403(b), TSP, IRA, or similar retirement accounts into a gold IRA. That gold IRA offers the same tax advantages as any other IRA account.

No matter how you decide to buy gold, Goldco has options available to you. With over a decade of helping Americans benefit from owning gold, and over $2.5 billion in precious metals placements, Goldco has worked hard to become one of the top gold companies in the country.

If you want to learn more about how gold can possibly help you achieve your goals, contact Goldco today to talk to one of our precious metals specialists.