Why $4,000 Gold Might Be the New Floor (Not the Ceiling)
Peter Reagan

From China’s buying spree to dollar devaluation fears, gold’s surge past $3,000 may be just the beginning. As global demand explodes and trust in fiat currencies crumbles, is $4,000 gold just the new floor of a multi-year bull market?

Your News to Know rounds up the most important stories about precious metals and the overall economy. This week, we’ll cover:

• Expert trader: "Gold is trading in a range between $3,000 - $4,000”
• Onlookers believe China drove gold to its recent all-time high…
• …and why gold is doing even better in India

Gold’s new normal: $3,000 to $4,000 range doesn't sound bad

A trader recently considered whether a pullback to $3,000 or a breakout to $4,000 gold price is likelier to happen next. (This tells us all we need to know about how far currency debasement has gone.)

Gold’s price primarily reflects the strength or weakness of the U.S. dollar, effectively an unofficial inflation rate report. Gold price can tell us a lot more, extending into structural concerns about the global financial system.

When your currency is exceptionally weak globally, it tends to really blow up in terms of ounces-of-gold local denominations. That we are anticipating a range as high and wide as $3,000 - $4,000 suggests an unpleasant future for our currency…

The mighty greenback we once spread across the modern world based on its convertibility into gold, then based on trust and faith, is now turning into – maybe it’s a bit harsh to call the dollar a “pyramid scheme,” but there are similarities.

Our analyst said a worst-case scenario sees gold falling as low as $2,800. For those of you who don’t watch gold’s price as closely as I do, $2,800 was where gold was trading back in February. That’s right – over the last three months, gold has risen about 5% ($125) per month.

And should that trend continue? We’re looking at $4,000 gold before the end of the year.

After Alasdair Macleod, there is now another voice in the mainstream raising awareness on structural weakness of the U.S. dollar.

Will Rhind, CEO of GraniteShares, noted how the historically-tight correlation between money supply and gold price has collapsed. While the dollar supply has expanded, that alone hasn’t been enough to warrant this kind of gold price surge.

So the gains in gold must be coming from weakness on other fronts. If we rule out money-supply-related dollar weakness, what else could be driving gold price higher?

• Counterparty risk: The concern that the federal government will fail to honor those $36 trillion in debt, either through outright default or a technical default (like exchanging old debt for new, 100-year, 0% debt)
• Dollar devaluation: Anticipation of an imminent, formal devaluation of the dollar (also known as the “Mar-a-Lago Accords,” a topic we haven’t yet discussed in detail)
• Dedollarization: An ongoing global transition away from the dollar as global reserve currency, in favor of “alternative currencies” (including gold bullion – Rio Reset, anyone?)
• Demand for physical gold: From central banks, institutions and individual investors – although, recently, investor demand for physical gold has been relatively muted

Recently, both Bloomberg’s Mike McGlone and Bank of America forecasters have gone public with $4,000 gold forecasts before the end of 2025.

What next? Christopher Aaron, founder of two investment firms, says this gold bull run should continue for another three to 10 years. He reminds us that gold bull markets last eight years on average.

So if you’re worried about “missing the boat” now that gold’s price seems well established above $3,000 – relax – there’s a lot more upside ahead. Of course, you’ll want to make your move sooner rather than later…

China may have driven gold to its latest all-time high – what’s next?

As a country that's known for consumer demand, seeing China’s gold coin and bar purchases surge30% year-on-year is a very clear signal.

It tells us, and others, that China is bidding the metal up. But China is far from alone!

Adrian Ash, director of research for a UK-based competitor, told Newsweek:

"The U.S. is clearly the epicenter of what's been driving gold prices in terms of global geopolitics and trade tariffs and his threat to sack Jerome Powell, all this stuff. But domestic U.S. investors as yet don't seem to be as anxious about that. They're not turning to gold on a comparative basis in the same way that we've seen Western Europe do.

"In the UK, Germany, and Spain – especially last month was notably up – you're a long way ahead of the five-year average for the monthly number of new first-time gold investors. The U.S. is up about 39-40% above its five-year average, which is a change, but it's not like the 120% move that we've seen in the UK or Germany."

In the U.S. gold is now the #2 most trusted asset (second only to real estate, the perennial investor favorite).

Others go far enough to call it China's bet on $5,000 gold. Volume on the Shanghai Gold Exchange is mentioned, with funds piling into the speculative side of things. This day trading activity is met by equal or greater vigor on the retail side, which continues to increase the premiums on gold jewelry – despite steep prices, buyers just can’t get enough.

Investment demand, such as coin and bar, is a centerpiece talking point here, same as here in the West.

A huge jump in demand for investment-grade gold bullion shows us the Chinese economy is full of risk, often of quick collapse, default and total loss of capital. (No wonder Chinese citizens and insurance companies can’t get enough gold!)

The trade war hasn’t made things any better. I expect, as a side effect, both American and Chinese currencies will weaken. I don’t believe that’s a good thing for us…

In a manner similar to, but perhaps not as severe as the recent gold bullion shortage in South Korea(second story at the link), Chinese banks are currently having difficulties meeting gold bar demand.

We talked about the $3,000 to $4,000 range, but those like Goldman Sachs do indeed view it as a $5,000 affair.

Gold might need a few more years to go that far, supporting the notion that we are in a multi year bull run.

It's strange to imagine $3,500 as a momentary block of sorts, but that's where we are, and prices are adjusting accordingly.

If the story of Chinese premiums has told us anything, it's that gold can simply be bid up – and investors will buy it nonetheless. Premium price spikes happen during times of high demand, and in those times, investors want to buy at any price.

That’s why it’s always best to secure your position before the next crisis becomes headline news. Because, if you don’t, you’ll very likely be paying much, much more for less.

India’s citizens have a lot of reasons to buy gold

The story to open with from India is that coin and bar demand rose by 60% between 2023 and 2024.

Where have we just seen coin and bar demand? Oh, yes – in China.

So the UK, Germany, Spain, China and India are all ramping up coin and bar purchases. In all cases, uncertainty is being cited as the driving force. We can entertain those in the U.S. hedging against a fallout with China, and the other way around.

But why India? Its problems are well-known, but not really something to stimulate coin and bar demand.

In India, the largest body of private investors are the country's poorest citizens, who buy incremental gold when they can and usually in the form of jewelry. This jewelry eventually accumulates, which is why we keep hearing India sits on the world's largest gold hoard.

The nation even has elaborate schemes and an industry designed to mobilize these lower-class investments and get them out of the household, immediately and down the line.

So the buyers in India could be banks, the government itself posing as one or more private investors, or affluent Indian citizens buying coins and bars. It might be all three, with the wealthy leading the charge.

The 239 tons of gold coins and bars that went into the country in 2024 made it the second-largest buyerof gold coins and bars in the world.

Generally speaking, gold has outperformed all other classes and so far delivered an incredible 41% return on investment since the start of the year. If you bought gold in a currency whose depreciation rate is higher than that of the U.S. dollar (most currencies), you've benefited even more.

So it's easy to see why those Indians who can afford it are buying heaps of physical gold bullion. The rupee has been in free-fall for a very long time, and transferring a sizeable part of your wealth from rupee to gold even just six months ago would have left many a lot better off.

 

 

Peter Reagan is a seasoned financial market strategist at Birch Gold Group with over 15 years of experience in the precious metals industry. He has been featured in several leading publications, including Newsmax and Zerohedge. At Birch Gold Group, Peter leverages his deep market insights to help educate customers on how they can diversify their savings into gold and other precious metals. His commitment to education has made him a trusted thought leader in the field. In addition to the Birch Gold website, you can follow Peter on LinkedIn.

 

www.birchgold.com