Will gold prices rise to $8,900 in the era of dollar decline? The Incrementum Annual Report presents a financial restructuring scenario for 2030

The global financial order is beginning to shake. According to the annual report “In Gold We Trust” released by Incrementum for 2025, as the reconstruction of the global currency and financial system progresses, gold prices are increasingly likely to rise well beyond traditional perceptions. The report suggests that by the end of 2030, gold prices could reach around $8,900 under inflationary scenarios, driven by the relative decline of dollar hegemony and the transition to a new financial order.

Why the Decline of Dollar Hegemony Makes Gold Prices Inevitable

Once, the dollar held an absolute position as the world’s reserve currency. However, the landscape has changed dramatically over the past decade. The hollowing out of US industry, uncontrollable fiscal deficits, and the rise of Bitcoin as a non-state credit asset have all contributed to a rapid erosion of trust in the dollar.

The Trump administration judged that the strong dollar was causing the decline of the US economy and planned a significant devaluation of the dollar. Simultaneously, new tariff policies (which increased to nearly 30% on average by April 2025) aimed to protect US industries, but these measures are more likely to generate deflationary pressures, potentially leading to monetary easing by financial authorities.

This dollar pressure and wave of financial restructuring directly impact gold prices. Gold, which carries no counterparty risk and is a “neutral currency” not belonging to any nation, is gaining new value amid a multipolar world order. According to a survey by the London Bullion Market Association (LBMA), gold liquidity has surpassed that of government bonds.

Gold Is Now in the “General Investor Entry Stage”

Based on Dow Theory, a bull market passes through three stages: accumulation, general investor entry, and frenzy. According to Incrementum’s analysis, the current gold market is precisely in the second stage, the “general investor entry stage.”

This stage is characterized by clear signs. Media coverage is becoming increasingly optimistic, new financial products are being launched one after another, and market analysts are raising target prices. Over the past five years, gold prices have risen by 92%, while the real purchasing power of the dollar has declined by nearly 50%. As of the end of April 2025, gold has set new all-time highs in dollar terms 22 times (compared to 43 times the previous year).

Importantly, this rise is still not fully developed. In 1979, there were 57 record highs, and compared to the historic bull market of 1980, the current increase remains relatively moderate. This indicates that there is still significant room for gold prices to rise.

From a technical perspective, gold is forming new breakthroughs both in absolute price and relative levels against stocks (S&P 500). This signifies that gold’s dominance over traditional assets has been established.

Why Central Banks Have Been Buying Over 1,000 Tons for Three Consecutive Years

The strongest pillar supporting the bullish gold market is the vigorous demand from central banks. According to the World Gold Council (WGC), central banks have been net buyers of gold since 2009, and this trend accelerated dramatically after the freezing of Russian foreign exchange reserves in February 2022.

As a record, central banks have added over 1,000 tons of gold reserves for three consecutive years. Notably, Asian central banks have accounted for most of these purchases, with Poland becoming the largest buyer in 2024. Goldman Sachs’ research report assumes China will continue to buy about 40 tons of gold monthly, amounting to nearly 500 tons annually.

As of February 2025, the world’s gold reserves reached 36,252 tons. Over the past 20 years, the proportion of gold in foreign exchange reserves has surged from 9% to 22%, the highest since 1997. However, it still falls short of the historic peak of over 70% in 1980, suggesting further potential for increase.

Interestingly, China’s official gold reserves account for only about 6.5% of total reserves. In contrast, the US, Germany, France, and Italy hold over 70% of their reserves in gold. Meanwhile, Russia has rapidly increased its gold reserve ratio from 8% in 2014 to 34% in early 2025, reflecting geopolitical shifts.

The Expansion of Fiat Currencies and Inflationary Pressures: The “Shadow Gold Price” Reveals the Reality

The unlimited expansion of the money supply has been a major long-term driver of gold prices. Since 1900, US population has increased 4.5 times, while M2 money supply has surged by 2,333 times. Per capita, this is an increase of over 500 times. The report likens this situation to “steroid-enhanced athlete muscle growth,” indicating that while appearances are impressive, the economic fundamentals are structurally fragile.

Across G20 countries, the average annual growth rate of M2 is 7.4%. After a three-year period of negative growth, the money supply is again on the rise, likely serving as a new catalyst for a “major bull market.”

An intriguing indicator is the “Shadow Gold Price” (SGP), which is the theoretical gold price if base money were fully backed by gold. Based on current market data:

• If US M0 were fully backed by gold: $21,416
• If US M2 were fully backed by gold: $82,223
• Internationally, with a 25% reserve ratio for M0: $5,100; with 40%: $8,160

Currently, gold accounts for only about 14.5% of the US monetary base, with the remaining 85.5% being “air.” During the bullish markets of the 2000s, this ratio increased from 10.8% to 29.7%. To reach a similar ratio, gold prices would need to exceed $6,000.

The New 60/40 Portfolio: A Major Shift in Asset Allocation

The traditional 60% stocks and 40% bonds asset allocation model is no longer considered modern, according to the report. Recognizing the loss of trust in government bonds and changing market conditions, it proposes a new allocation:

• Stocks: 45%
• Bonds: 15%
• Safe assets like gold: 15%
• Performance gold (silver, mining stocks, etc.): 10%
• Commodities: 10%
• Bitcoin: 5%

A key point is dividing gold into two categories. One is “safe assets like gold,” which enhances portfolio defense. The other is “performance gold,” including silver, mining stocks, and commodities, expected to appreciate significantly over the coming years.

Historically, silver and mining stocks tend to follow gold’s lead during upward trends. Looking at the overall market, gold usually leads the rise, with other assets following in a relay race pattern.

Gold Price Forecasts: Base and Inflation Scenarios

Incrementum, based on its 2020 model, presents multiple gold price forecast scenarios:

Base Scenario: Gold prices by the end of 2030 are around $4,800, with a mid-term target (end of 2025) of $2,942.

Inflation Scenario: A more bullish outlook, predicting gold around $8,900 by the end of 2030, with a mid-term target (end of 2025) of $4,080.

Current gold prices already surpass the mid-term target of $2,942 in the base case, indicating a possible trajectory toward the inflation scenario. Ultimately, the gold price in the late 2020s is likely to be near the midpoint of these two scenarios, depending on inflation rates over the next five years.

Referring to stagflation environments of the 1970s and early 1980s, gold recorded an average annual return of 32.8%. Silver was 33.1%, and mining stocks 21.2%. Applying similar conditions today, the real annual compound growth rate for gold is estimated at about 7.7%, and for silver around 28.6%.

The Symbiotic Relationship Between Bitcoin and Gold: From Competition to Synergy

While Bitcoin’s emergence might seem to compete with gold, the report emphasizes that they are more complementary. Bitcoin, as a decentralized cryptocurrency, operates independently of state control and enables cross-border transactions. The US’s enactment of the strategic Bitcoin reserve law and its entry into a digital gold war at the national level accelerate this trend.

As of the end of April 2025, the market value of mined gold worldwide was about $23 trillion (217,465 tons), while Bitcoin’s market value was about $1.9 trillion, roughly 8% of gold’s market value.

The report suggests that Bitcoin could reach 50% of gold’s market capitalization by the end of 2030. Assuming a conservative gold price scenario of around $4,800, for Bitcoin to reach half of gold’s market cap, the price of one Bitcoin would need to rise to approximately $900,000.

Following the principle that “competition stimulates business,” a portfolio combining gold and Bitcoin is likely to outperform holding each asset alone on a risk-adjusted basis. Gold provides “stability,” while Bitcoin offers “convexity (volatility benefits),” justifying their coexistence based on long-standing beliefs.

Short-term Correction Risks and Long-term Investment Perspective

Although the long-term upward trend is solid, the report acknowledges the possibility of short-term corrections. Factors that could temporarily hinder the bullish market include:

Decline in central bank demand is the biggest risk. If the current quarterly purchase pace of about 250 tons unexpectedly declines, structural demand could collapse.

Reduction of speculative positions is also significant. The widespread sell-off after April 2025’s “Independence Day” demonstrated how quickly speculators can reduce their positions.

Diminished geopolitical premiums are another concern. Agreements ending the Ukraine war, easing tensions in the Middle East, and the early conclusion of the Central American trade war could significantly lower associated geopolitical risk premiums.

Other factors include unexpectedly strong US economic data (which could prompt the Fed to tighten), high technical and emotional risks (extreme positioning), and short-term rebounds in the dollar exchange rate.

The forecast indicates that the short-term market environment will be tense, with gold prices possibly dropping temporarily to around $2,800 or stagnating. However, this correction is viewed as part of the stabilization process of the bullish trend and is unlikely to threaten the medium- to long-term upward trajectory of gold.

The Strategic Role of Gold in the Era of Financial Restructuring

The report suggests that current gold prices are not only a reaction to crises but may also be the first signs of a “historic turning point” (Golden Swan Moment). As the global reconstruction of financial and monetary orders accelerates, trust in traditional safe assets is rapidly eroding, and gold is regaining its status as a “super-national settlement asset.”

Quoting Zoltan Pozsar’s “Bretton Woods III” thesis, the world is transitioning from Bretton Woods I backed by gold, through Bretton Woods II supported by dollar reserves, to a new monetary order backed by gold and other commodities.

Gold offers three major advantages as an anchor for the new international financial system. First, gold is neutral and not owned by any country or political force, making it a potential unifying element in a multipolar world. Second, gold carries no counterparty risk; countries can store gold domestically to easily counteract confiscation or sanctions. Third, a 2024 survey shows that the average daily trading volume of gold exceeds $229 billion, surpassing many advanced countries’ government bonds in liquidity.

The significant shift in Europe’s fiscal policy is also a key background factor. Germany’s next chancellor, Friedrich Merz, proposes excluding defense spending exceeding 1% of GDP from debt limits and establishing a €500 billion debt-financing program. With Germany’s national debt projected to rise from 60% to 90% of GDP, the conservative Christian Democratic Union (CDU) has officially abandoned fiscal conservatism, a symbolic move. After this announcement, German bonds experienced their largest fluctuation in 35 years.

Ultimately, the rise in gold prices is a direct reflection of the loss of confidence in the dollar and traditional safe assets. As US and German bonds continue to lose trust, gold is reclaiming its original role as a “neutral, debt-free foundation for trade, exchange, and trust,” not as a tool of political power. In an environment where multipolarity, accelerating money supply expansion, and the largest-ever central bank gold buying spree reinforce each other, further increases in gold prices are not only possible but arguably inevitable.