The Future of Gold from 2019 to 2039 Sam Laakso Bachelor’s Thesis Degree Programme in Business Administration 2019 Abstract 30.4.2019 Author(s) Sam Laakso Degree programme Finance and Economics Report/Thesis title Number of pages The Future of Gold from 2019 to 2039 and appendix pages 166 + 6 This report is an extensive gold market analysis which examines the future of the gold mar- ket starting from 2019 and ending to 2039. For the purpose of this report, seven interna- tionally recognised professionals including Gary Savage, Alexis Stenfors, James Rogers, David Brady, Brent Johnson, David Morgan and Jan Von Gerich were interviewed and over one hundred independent sources were examined. Aspects discussed in this report include gold’s monetary history over the past 150 years, the world’s current monetary system, the supply and demand factors of the gold market as well as the structure of the gold market itself, financial market manipulation and market effi- ciency, cycles analysis as well as the geopolitics around gold. The report examines all of these subjects individually after which these aspects are used to form a reliable and thor- ough market analysis. The report divides into two core segments which are the theoretical framework and the market analysis. The theoretical framework provides the foundation to which the market analysis is built on. The market analysis consists of three scenarios of which the first sce- nario examines purely the supply and demand fundamentals of the gold market, the sec- ond scenario presents a cycles analysis for gold and the thirds scenario examines the pos- sibility of a global monetary system reform. All of the scenarios present both the possibili- ties and the risks for gold prices from the point of view in question. At the end of the market analysis segment of the report is a chapter which combines all of the scenarios and pro- vides an all-inclusive picture of the future of gold for the next twenty years. The fundamentals around gold are positive for higher gold prices as supply is likely to con- tract and demand is likely to hold stable over the next twenty years. The cycles which drive the financial markets also suggest that gold prices are likely to head higher. In addition, to these factors, the monetary demand for gold has been increasing suggesting that gold could be remonetised over the next twenty years which poses both threats and immense opportunities to gold investors. Due to gold’s history and geopolitical importance, gold is to be considered as money. There are majors movements in the world to dilute the US dollar’s reserve currency status which in the light of the evidence could result into the remonetisation of gold. In addition, the Efficient Market Hypothesis is immensely flawed to a point that the financial markets should be considered relatively inefficient in the short and intermediate timeframes. Finan- cial markets are to be considered cyclical which means that they can be interpreted via sentiment and cycles. Gold prices are likely to head higher over the next twenty years and therefore gold offers great potential with relatively low risk to investors around the world. Keywords Gold, Market Analysis, Economics, Monetary System & Geopolitics. Table of contents 1 Introduction ................................................................................................................... 1 2 Acknowledgements ....................................................................................................... 2 3 Theoretical Framework .................................................................................................. 3 3.1 The Monetary Aspect of Gold ................................................................................ 3 3.1.1 The Brief History of Gold as Money ............................................................ 4 The Classical Gold Standard ................................................................................. 5 Gold Exchange Standard ...................................................................................... 6 The Bretton Woods ............................................................................................... 9 The Global Dollar Standard and The Era of Gold as a Reserve Asset ................ 13 The Swiss Franc and Gold .................................................................................. 17 Modern Gold Dinar .............................................................................................. 20 3.1.2 Central Banks and Gold ........................................................................... 22 Relationship Between Central Banks and Gold ................................................... 22 Central Bank Holdings ........................................................................................ 24 Gold Accumulation .............................................................................................. 25 Gold Repatriation ................................................................................................ 29 3.1.3 Conclusion on Gold’s Monetary Aspect .................................................... 31 3.2 Gold Markets ...................................................................................................... 32 3.2.1 London Loco & Zurich Loco ..................................................................... 33 3.2.2 COMEX .................................................................................................... 36 3.2.3 Shanghai Gold Exchange ......................................................................... 36 3.3 Price Driving Fundamentals of the Gold Market .................................................. 38 3.3.1 Gold’s Properties as an Element .............................................................. 38 3.3.2 Gold Demand ........................................................................................... 40 Jewellery Demand .............................................................................................. 41 Investment Demand ............................................................................................ 43 Industrial Demand ............................................................................................... 45 Central Bank Demand ......................................................................................... 46 3.3.3 Gold Supply ............................................................................................. 47 Gold Mining in Figures ........................................................................................ 47 Lifecycle of a Gold Mine ...................................................................................... 49 Largest Gold Mining Companies and The Health of The Industry ....................... 50 Trends in the Gold Mining Industry...................................................................... 52 Gold Recycling .................................................................................................... 53 Junior Mining Industry ......................................................................................... 55 3.4 Why Financial Markets Are Inefficient ................................................................. 55 3.4.1 The Efficient Market Hypothesis ............................................................... 56 3.4.2 Financial Markets in Reality ..................................................................... 58 3.4.3 Conclusion on Market Efficiency .............................................................. 62 3.5 Gold Market Manipulation ................................................................................... 63 3.5.1 Previous Cases ........................................................................................ 63 J.P. Morgan 2018 ................................................................................................ 64 Deutsche Bank & Many Others 2016 .................................................................. 65 3.5.2 Current Situation ...................................................................................... 66 Dumps in COMEX ............................................................................................... 67 Rationale and Market Participants....................................................................... 71 3.5.3 Professional Opinions and Conclusion ..................................................... 72 3.6 The Foundation of Cycles and Sentiment Analysis ............................................. 73 3.6.1 How Do Cycles Appear on The Markets ................................................... 74 The Rationale Behind Cycles .............................................................................. 74 What Is Market Sentiment ................................................................................... 76 Interpretation of Cycles ....................................................................................... 80 Daily Cycles ........................................................................................................ 82 Intermediate Cycles ............................................................................................ 82 Multiyear Cycles .................................................................................................. 83 Evolution of Cycles ............................................................................................. 87 3.6.2 Conclusion and Further Reference ..........................................................