Interesting. The graph below shows possible gold prices over the next five years, if the trend of the last twelve months continues.

Taking the percentage that the gold price moved each month last year, and applying it to today’s gold price calculates a possible graph for next year. If one presumes that gold prices stay around $640, gold’s 50-day moving average, then this chart would be the outcome.

The graph shows that gold prices could be over $2000 at the end of 2011. This is equivalent to gold’s all time high in 1980, as adjusting $850 for today’s inflation gives around $2200. But adjusting $850 for inflation in 5 years time may prove to give a much greater figure.

However simply using the data from last year will not give a completely accurate predication. As with any bull market, this upward trend does not continue at a steady rate. The rate at which gold prices increase will itself increase as the bull market progresses. Therefore this graph is extremely conservative and gold is likely to move twice as fast as last year. This means that $1000 per ounce could be reached in 2007 and $2000 by 2009. In fact, gold could hit $5000/ounce in 2011. We will cover these predictions and the reasoning behind them in a future article.