I've noticed something interesting about the gold market right now. After the decline in gold we've seen in recent months, especially that 11% drop in March, which was the largest since 2013, Wells Fargo Securities has just published an analysis that puts things into perspective.

The thing is, according to their chief strategist Ohsung Kwon, this correction could actually be a good opportunity. Why? Because we are currently in the fourth monetary depreciation cycle since 2022. And apparently, this cycle is only just beginning — just 3.5 years into an average duration of 8.5 years.

The optimistic scenario is quite aggressive: Wells Fargo projects that gold could reach $8,000 per ounce by 2027. Considering it is currently trading around $4,800, that represents over 66% upside potential. Kwon relies on the M2/gold ratio to identify these cycles — essentially, he looks at how the global money supply compares to the price of gold.

What supports this thesis is that four out of five economic scenarios indicate a new monetary depreciation. Central banks worldwide are massively buying gold as a safe haven asset, which was especially evident after the Ukraine offensive in 2022 and the subsequent US rate hikes.

Of course, there is also a pessimistic scenario — Kwon predicts that if things go badly, gold could fall to $4,000 by the end of 2027, a decrease of about 17% from the current level. But honestly, with four out of five scenarios pointing toward ongoing depreciation, the bias clearly leans toward the bullish side.

Historically, these monetary depreciation cycles have occurred during major crises — the Great Depression, Nixon Shock, stagflation, the war on terror, the subprime crisis. We are clearly in a period where geopolitical tensions and monetary policies are creating conditions for gold to shine again.