Here are a few reasons why gold should be accumulated at these levels:

1. Rising Interest Rates

Although gold rose significantly from 2001 to 2011, it was not really the ideal conditions. There were many reasons for conditions not being ideal, such as rising stock markets and major commodities like oil (more markets rising means more competition for investment).

However, now I would like to focus on only interest rates. The direction of interest rates is normally indicative of a type of economic condition that exists. During the period from 2001 to 2011 interest rates were falling, and this was indicative of economic conditions that are less than ideal for gold prices.

In fact, these falling interest rates were in some way facilitating significant rises in the stock market and oil for example, which are investment classes competing with gold.

Interest rates turned in 2016, and this indicates conditions that will be ideal for gold is forming. Interest rates are an indication of the value the market place on debt. If interest rates are declining then a higher value is placed on debt.

If interest rates are rising, then a lower value is placed on debt. Gold and debt are basically completely opposite asset types. So, when interest rates are falling then a lower value is placed on gold and vice versa.

Below, is a chart that compares gold prices to interest rates:

The 70s gold rally occurred during ideal conditions – when interest rates were generally rising. However, the gold rally from 2001 to 2011 occurred during falling interest rates, which is less than ideal.

With the coming rising interest rates, gold will rise much more and much faster than it did during the 2001 to 2011 bull market phase. It will rise until interest rates are at relatively high values, so that debt is valued very low.

2. The relationship between gold and the South African Rand/US Dollar (USD/ZAR) exchange rate

This is more of a technical reason. Below, is a long-term USD/ZAR chart: