Despite gold being stuck near the $1,300 level this week, this year's ?In Gold We Trust' report sees early formation of a new bull market, citing 3 fundamental ?changing tides? that will support gold prices in the long-term…

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1. The first change is the tide in monetary policy, authors Ronald-Peter Stoeferle and Mark J. Valek said on Tuesday. ?The reversal from [quantitative easing] QE to [quantitative tightening] QT has provoked remarkably little attention in public discourse. However, the consequences of this monetary U-turn could be dire, because the monetary amphetamine that prevented a relapse into crisis in the post-Lehman era has come with numerous side effects.?
2. The second change is the tide in the global monetary order, which could see the U.S. dollar potentially de-throned sometime in the future. ?De-dollarization and the reshaping of a unipolar world monetary regime into a multipolar one continue…The process comes with geopolitical polarization and rhetoric that promotes divisiveness above unification.? The effect on the U.S. could be very significant, according to Incrementum, with gradual loss of currency hegemony impacting inflation and interest rates.
3. Finally, the third change is technology ? the digitalization of all transaction across the globe and the popularity of cryptocurrencies. ?The advent of cryptocurrencies has led to further acceleration of the digitalization of money.? Stoeferle and Valek see decentralized ledger technologies as key for the future monetary order, adding that gold and cryptocurrencies are ?friends, not foes.? ?A collaborative approach would play to the strengths of both. The first gold-based cryptocurrencies are underway as we speak,? they wrote.

Putting aside their long-term gold outlook, Stoeferle and Valek also explored short-term possibilities, outlining 4 scenarios for gold prices.

1. In scenario A, the authors envision a genuine economic boom in the U.S., with real growth more than 3%, real interest rates at more than 1.5%, and the gold price between $700 and $1,000 a [troy] ounce.
2. In scenario B, the economy is ?muddling through,? growth and inflation is between 1.5%-3%, monetary normalization is still not fully successful, and the gold price is at $1,000-$1,400 a [troy] ounce.
3. In scenario C, there is an inflationary boom, growth and inflation is more than 3%, monetary normalization is still not fully successful, and the gold price is between $1,400 and $2,300 a [troy] ounce.
4. In scenario D, there is stagnation and economic contraction, with stoppage or even reversal of monetary policy, and gold between $1,800 and $5,000.

After examining all four, Incrementum said that gold has been moving according to scenarios B and C. ?The actual growth and inflation figures reflect this path rather well. The crucial issue will be whether the feat of the monetary normalization is successful and whether scenario B or C will prevail in the coming years. A recession is overdue; the changing of the tide in monetary policy could trigger one in the coming 6 to 24 months,? Stoeferle and Valek pointed out.

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