Gold's price pattern in 2019-2021 closely resembles that of 2010-2012, rising steadily to a peak in the second year and then declining. However, important differences in monetary and fiscal policy today suggest gold may break this pattern. While easy money helped fuel a recovery a decade ago, today's policies of low rates and high deficits could lead to a more inflationary recovery. If so, gold may benefit rather than enter a bear market as it did in the previous cycle. While the 2020s may not be a repeat of the "Roaring Twenties," loose policies make that outcome uncertain, further supporting gold over the coming years.

1. Is Gold Now Replaying 2010-2012

2. Points To Be Covered Today:
• Is Gold Now Replaying 2010-2012 ?
• Gold In 2010-2021
• Will There Be Roaring Twenties For Gold?
• Gold News & Analysis
• Gold Technical & Fundamental Overview
• Gold Price & Chart

3. Is Gold Now Replaying 2010-2012
• The 2019-2021 gold chart is disturbingly similar to that of 2010-
2012, but it does not have to be the harbinger of a bear market.
• Many ancient cultures saw history as cyclical. According to this
view, society passes through repeated cycles.
• Can this apply to gold as well? I’m not referring here to the
simple fact that we have both bull and bear markets in
the precious metals – I refer here to the observation that gold’s
price pattern seen in 2019-2021 mirrors that of 2010-2012.

4. Gold In 2010-2021

5. Gold In 2010-2021- I
• As you can see, in both periods, gold was steadily rising to a peak in
the third quarter of the second year.
• A decade ago, the yellow metal gained 29 percent in 2010 and 74
percent as it hit the top. Then, it declined 19 percent by the end of
2011. Fast forward to more recent times.
• Gold gained 18.4 percent in 2019 and 62 percent at the peak.
Afterwards, it declined 9 percent by the end of 2020.
• So, although the magnitude has now been weaker than in the
aftermath of the Great Recession, the pattern is quite similar.
• The next chart – which presents the normalized gold prices in both
periods to indices (when the starting point equals 100) – nicely
illustrates how gold in 2019-2021 closely resembles gold from 2010-
2012.

6. Gold Price In 2010 – 2012 & 2019-2020

7. Gold Price In 2010 – 2012 & 2019-2020 - I
• This similarity may be disturbing. Should the pattern hold, then gold could go down
significantly and stay in a sideways trend for years. As a reminder, this is what happened
a decade ago.
• Gold bulls fought until the end of 2012, when they gave up and the yellow metal entered a
full bear market, plunging 45 percent from the top to the bottom in December 2015.
• Then, it stayed generally flat till the end of 2018. If this cycle replays, we could see the
price of gold go below $1,200 by the end of 2024.
• To be clear, there are some arguments to support the bearish case. Just as in the
2010s, the world is recovering now from the global economic crisis.
• The recession is over and the prospects are only better. Perhaps they’re not rosy, but
they’re certainly better than many previously expected, which is what matters for the
financial markets.
• As the worst is behind us, the risk appetite is returning, which could put gold and
other safe-haven assets into oblivion. Actually, some could even argue that gold may now
plunge even earlier, as a decade ago it was supported by the European sovereign debt
crisis, which peaked in 2011-2012.

8. Gold Could Break The Pattern And Diverge
• However, there are also important reasons why gold could break the pattern and
diverge from the 2010-2012 trend. First, we now have a much more dovish
Fed.
• The U.S. central bank slashed the federal funds rate much quicker and
expanded its balance sheet more decisively.
• Additionally, to avoid a taper tantrum caused by its announcement about tapering
asset purchases, this time the Fed will normalize its monetary policy in a very,
very gradual way, if at all. It means that interest rates will stay lower for longer.
• Lastly, the U.S. central bank changed its monetary policy framework, i.e., it
prioritized the labor market over price stability and became more tolerant to
higher inflation.
• Second, we also have a much easier fiscal policy.
• Even before the global pandemic, Trump significantly expanded budget deficits,
but the Great Lockdown made them even larger. As pundits believe that the fiscal
response in the aftermath of the global financial crisis of 2007-2009 was too
small, they now want to go big – indeed, Biden’s $1.9 trillion economic plan is
waiting to be passed by Congress.

9. This Recovery Might Be More Inflationary Than
A Decade Ago
• This is because not only did the monetary base increase, but the broad money supply did
as well. Last time, the Fed injected a lot of liquidity to the banking sector to bailout the
banks.
• Now, the money has flowed much more through Main Street and the household sector,
which could turn out to be more inflationary when all this money will be spent on goods
and services.
• Also, last time we observed some deleveraging in the private sector, while now the supply
of loans is continuously increasing at a positive rate. We are also already
observing reflation in the form of a commodity boom, so gold may follow suit.
• To sum up, the patterns seen in the gold market in 2010-2012 and 2019-2021 are
remarkably similar. So, the recent gold’s weakness may be really disturbing.
However, this resemblance does not have to be a harbinger of further problems
coming for gold bulls.
• After all, as Mark Twain is reputed to have said, “history doesn’t repeat itself, but it often
rhymes”. Indeed, the macroeconomic and political environment is now clearly different
than a decade ago – it’s more fundamentally positive for the price of gold.

10. Will There Be Roaring Twenties For Gold
• The 2020s might be less roaring than the 1920s, which seems like good news for gold.
• The United States is strongly polarized, with blue versus red, liberals versus
conservatives, and so on. People are divided along many lines, but the biggest division
line is between those who count decades from 0 to 9 and those who count them from 1 to
10.
• It is intuitive for many people to adopt the first method, especially that we think of decades
as ‘the 20s’, ‘the 30s’, and so on. However, the catch is that there was no Year Zero, so
the first decade of the common era was years 1 to 10. Following this logic, the current
decade started on January 1, 2021, not January 1, 2020.
• So, I feel fully entitled to investigate how gold will behave in the new decade. The issue is
especially interesting as some analysts claim that we are entering the Roaring Twenties
2.0. Are they correct?
• On the surface, there are some similarities. The 1920s were a decade that followed the
nightmare of World War I and the Spanish Flu pandemic.
• It was a time of quick economic growth (the U.S. GDP grew more than 40 percent in that
period) and rapid technological innovation fueled predominantly by the rising access to
electricity and big improvements in transportation (automobiles and planes).

11. Will There Be Roaring Twenties For Gold - I
• Fast forward one century and we land in the 2020s, which is a decade following the
nightmare of the coronavirus pandemic. There are hopes for an acceleration in
technological progress driven mainly by the rising scope of remote work, digital solutions,
cloud computing, artificial intelligence, Internet of Things, 5G networks, robotization,
super-batteries, electric vehicles, and so on.
• And given the pent-up demand and months spent in lockdowns, consumers are ready to
congregate and spend!
• However, there are good reasons to be skeptical about the narrative of the Roaring
Twenties 2.0. The era of post-war prosperity was fueled by the return to the normalcy in
the sphere of economic policy.
• I refer here to the fact that after WWI, there was a successful transition from a wartime
economy to a peacetime economy. In contrast, in the aftermath of the Great Recession,
there is a gradual transition from the peacetime economy to a wartime economy, that was
only accelerated during the epidemic and the Great Lockdown.
• In particular, both the government spending and the fiscal deficits were sharply reduced in
the post-war era. In consequence, the U.S. public debt declined, especially in real terms.
Similarly, the Fed reversed its monetary police and allowed for monetary contraction (and
quick recession) in 1919-20 to reverse wartime inflation.

12. Will There Be Roaring Twenties For Gold - II
• In other words, the tighter monetary and fiscal policies led to an
environment of economic prosperity.
• Also helpful for the U.S. were developments such as trustbusting and an
economic recovery in Germany after its hyperinflation – all developments
that will not replay in the 2020s.
• In contrast, neither the fiscal policy nor the monetary policy are going
to normalize anytime soon, even if the COVID-19 pandemic is brought
under control.
• The national debt has risen by almost $7.8 trillion under Trump’s
presidency – a level that rivals Italy’s. The debt-to-GDP ratio has soared,
as the chart below shows.
• And Joe Biden doesn’t worry about deficits – instead, with his plan of $1.9
trillion economic stimulus, he is going to balloon the public debt even
further by increasing government spending.

13. Total Public Debt As% Of GDP & Gold Prices

14. Gold News For The Gold Market
• But maybe we shouldn’t worry about the debt? After all, after WW2, the public
debt was even higher, but the economy didn’t collapse – actually, it grew so
rapidly that the debt-to-GDP ratio diminished significantly.
• Yup, that’s correct, but after the pandemic, the economy will not recover as
quickly as in the aftermath of WW2. Oh, and by the way, the economy grew its
way out of debt only thanks to several years of high inflation.
• Therefore, the current complacency and naïve belief in low-interest rates and
debt-driven economic recovery makes the scenario of the Roaring Twenties 2.0
not very likely, despite all the fantastic technological progress we are observing.
• So, instead of acceleration, we could rather observe an economic slowdown due
to the poor economic policy that hampers the expansion of the private sector.
Indeed, the recent report by the World Bank warns about the lost decade: “If
history is any guide, unless there are substantial and effective reforms, the global
economy is heading for a decade of disappointing growth outcomes.” This is
good news for the gold market.

15. Gold Can Shine In Such An
Macroeconomic Environment
• But even if the Roaring Twenties 2.0 do happen, it wouldn’t
have to be very bad for the yellow metal. It’s true that the 1920s
was a period of wealth, prosperity, and decadence in which
people didn’t think about preserving capital and investing
in safe-haven assets such as gold.
• In contrast, there was a lot of risk-taking fueling the boom in the
stock market. However, the Roaring Twenties were an
inflationary period of debt-driven growth that ended in the
systemic economic crisis called the Great Depression –
and gold can shine in such an macroeconomic
environment.

16. Gold News & Analysis
• Gold Price Forecast: XAU/USD eyes $1797 and $1789 as the next downside targets – Confluence Detector.
• Gold price snapped its recovery mode and resumed its downtrend, now flirting with fresh monthly lows just above $1800.
• Resurgent supply in the European session prompted another downswing for gold price, as the dead cat bounce witnessed earlier in the
Asian trades vanished.
• The Technical Confluences Detector shows that gold price is challenging the critical support around $1802, the convergence of the previous
day low and Bollinger Band 15-minutes Lower.
• Sellers remain poised to test the key SMA100 one-day at $1797 is the latter caves in.
• The next downside target is aligned at the pivot point one-day S1 of $1789.
• However, if the $1800 round number holds up, a bounce-back towards $1810 could be in the offing. That level is the pivot point one-month
S1.
• Gold bulls will then flex their muscles to probe $1817, the intersection of the SMA10 one-hour and Fibonacci 23.6% one-day.
• Recapturing $1822 is critical to negate the bearish momentum in the near term. The powerful resistance is the confluence of the Fibonacci
61.8% one-month and the previous high four-hour.
• Source:
• Gold Price Forecast: XAU/USD eyes $1797 and $1789 as the next downside targets – Confluence Detector (fxstreet.com)

17. Gold Technical Overview

18. Gold Fundamental Overview

19. Gold Price & Chart

20. Is Gold Now Replaying 2010-2012

21. THANKS FOR LISTENING
Is GoldNowReplaying2010-2012