facebook
CAD
USD
back to top
News

Is the Gold Price Too High?

gold bars

2024 was a tremendous year for gold as the price rose by over 25%. More gains look to be coming in 2025, which leads many to ask if the price is too high for new purchases.

With any investment, buying low and selling high is the key to success. However, timing your purchases to coincide with price lows is always a difficult proposition. This is especially true with precious metals, where it always seems that your best opportunity to buy is at a time when investors are bearish and it seems that even lower prices are coming.

 

Why Buy Gold When Prices Are High?

At TF Metals Report, we refer to this as one of our most tried and true adages:

  • "Always be prepared to buy when things look the worst but, if trading, you should always be prepared to sell some when things look the rosiest."

It's a contrarian mindset, but it has served us well over the years. Think about just the past few months. Things looked quite rosy in late October as the gold price was making new all-time highs day after day after day. As it turns out, that was the time to sell, not buy, as price fell almost 10% in the weeks that followed.

Alternatively, the situation looked dark and scary by mid-November. That 10% selloff scared off a lot of investors and demand for gold fell...just before price began to rally again to its current levels.

 

What Is the Long-Term Value of Gold?

With this in mind, what's a precious metals stacker to do as 2025 begins and the spot price is once again near $2700/ounce? Well, first you need to look ahead and try to discern which way prices will be headed in the new year. Personally, I expect another solid year for gold and silver with another round of new all-time highs for gold pending soon and a $3000+ price by later this year. I tried to lay out all my reasons for this optimism in my annual "macrocast" last week. If you missed it, here's a link:

 

Should You Buy Gold Today?

There will certainly be periods where sentiment and price wash out, providing you with opportunities to "buy the dip" and save a few bucks in the process. But there will also be periods where optimism and enthusiasm will abound. When this happens, history has shown that you might postpone further purchases until you get some sort of price pullback. Again, "always be prepared to sell some when things look rosiest."

But let's get back to the question posed in the title of this post. Is the gold price too high? This is a long-term question for stackers, not necessarily a short-term question for traders. Is the gold price too high? If you buy today or this week, will you regret the purchase over time?

 

Gold vs. the Dollar: A Long-Term Perspective

Well, first of all, we should start with this X post and chart from Michael Oliver. Notice that the gold price has outperformed the S&P 500 Total Return Index since the start of this century. That's 25 years of investment performance, so this can't be brushed aside as just some sort of short-term trend.

Precious metals prices analysis

But that's just measuring the gold price versus another investment class. The true value of gold and its most important measuring stick is gold versus your local fiat currency. I live in the United States, so gold's appreciation against the dollar is my most important comparison. But what's the best way to measure gold versus the dollar over time? For me, that's simple.

 

How Gold Has Held Its Value Over Time

Consider first that the international standard form of gold is the London Good Delivery Bar. These bars are almost always about 400 ounces in size, and you've no doubt seen them in pictures plenty of times over the years.

Consider first that the international standard form of gold is the London Good Delivery Bar. These bars are almost always about 400 ounces in size, and you've no doubt seen them in pictures plenty of times over the years. They look like this:

 

Prior to President Nixon ending the dollar's convertibility to gold and "closing the gold window" in 1971, the gold price was fixed at $35/ounce. That means that if you could cobble together about $14,000, you could buy one for yourself. $35 x 400 = $14,000. Not a bad deal.

Now fast forward about 30 years. By the end of the 20th century, the price of gold had risen to about $300/ounce. That same bar of gold would now cost you about $120,000. $300 x 400 = $120,000. That's almost a ten-fold increase from 1971, but still, not a bad deal.

And now today, as 2025 begins, the price of gold is about $2700/ounce. That same bar—the very same one that only cost $14,000 back in 1971—now costs nearly $1,100,000! $2700 x 400 = $1,080,000.

What happened? Has the bar changed? Nope. It's the same bar. The only thing that has changed is the amount of dollars it takes to purchase it. So how do you measure the effectiveness of your gold holdings? By this metric. What used to cost $14,000 fifty years ago now costs $1,080,000. Did the gold go up in value or did the dollar go down in value? That's two sides of the same question!
A better question is: Did gold protect you financially as your purchasing power fell by over 90% in the 50+ years since Nixon ended the gold standard? The answer to that question is undeniably and categorically "YES"!


As such, is gold at $2700 too expensive? Is the price "too high"? I guess that all depends upon your time horizon and investment needs. If you're looking to buy some gold this month, only to sell it next month, then yes, maybe you look somewhere else. However, if you are looking for long-term financial protection against the endless devaluation of all fiat currencies, then gold is your best bet. The price is not "too high" today, and you should strongly consider adding some to your portfolio. 


Buy gold and buy silver today to safeguard your wealth and hedge against economic uncertainty. Protect your portfolio with precious metals, a time-tested strategy for preserving value during market volatility. Investing in gold and silver provides financial security and helps diversify your assets in an unpredictable economic climate.


 

Don’t miss a golden opportunity.

Now that you’ve gained a deeper understanding about gold, it’s time to browse our selection of gold bars, coins, or exclusive Sprott Gold wafers.

About Sprott Money

Specializing in the sale of bullion, bullion storage and precious metals registered investments, there’s a reason Sprott Money is called “The Most Trusted Name in Precious Metals”.

Since 2008, our customers have trusted us to provide guidance, education, and superior customer service as we help build their holdings in precious metals—no matter the size of the portfolio. Chairman, Eric Sprott, and President, Larisa Sprott, are proud to head up one of the most well-known and reputable precious metal firms in North America. Learn more about Sprott Money.

Learn More
about-sprott-skyline
Head shot of Craig Hemke

About the Author

Our Ask The Expert interviewer Craig Hemke began his career in financial services in 1990 but retired in 2008 to focus on family and entrepreneurial opportunities.

Since 2010, he has been the editor and publisher of the TF Metals Report found at TFMetalsReport.com, an online community for precious metal investors.

*The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.

no_comments

Looks like there are no comments yet.