I don’t know if you’ve been paying attention, but the price of gold has been extremely hot as of late, going up by a steamy 20 percent over the course of the last two months. And that’s only a little bit surprising. Look at the state of our economy. With inflation going through the roof and our dollar decreasing in purchasing power, folks are weary that we’re headed for a significant rough patch in the near future. Precious metals are a great investment to help protect yourself against potential crashes and other emergencies.
So, according to Profstonge Weekly, gold has been almost doubling ever since right before the coronavirus pandemic hit. At that point in time it was crawling along, hanging out at $1500. Well, in April 2024, it closed out above 2400.
Soaring prices is a new experience for many gold investors, long accustomed to taking the slow and steady stairs while stocks take the elevator. But here we are with stocks flat and gold up 20%. In fact, at this point gold has now matched the S&P 500 throughout the pandemic.
And, of course, it runs circles around the US dollar, melting like ice cream in the sun thanks to federal spending and a very obliging Fed that’s knocked a fifth off the dollar’s buying power since the pandemic.
What’s driving the gold rally? 3 things: inflation, central bank buying, and geopolitical tension including Russian sanctions. With a guest appearance by some large mystery buyer — rumored to be backed by the Chinese government.
We’re now coming up on 6 months of increasing inflation with the transitory inflation narrative, according to the report, being just a “head-fake.”
The write of the article linked above went on to write, “I also mentioned recently how central banks are now openly admitting they’re preparing for some major financial crisis — a senior Dutch central banker said the quiet part out loud a few months ago, and presumably the crisis they’re preparing for is sovereign debt and the bank collapses that tend to come along for the ride.”
Add to that the current geopolitical tension happening around the globe, especially Russia and China. Now, the author of the piece says that Russia isn’t all that important, comparing it to “Mexico with nukes, with a fairly inconsequential economy.”
However, the writer points out that the real issue is the U.S. sanctions, especially the effort to seize assets of the Russian central bank, which has alerted the rest of the world that their dollars are at risk. That if you so much as sneeze in a direction President Joe Biden doesn’t like, your dollars might end up getting seized.
That sends them to the next-best asset, including gold. Gold’s a pretty small market — all the gold in the world is worth about $16 trillion. While all the government debt is worth close to $100 trillion. That means if money’s moving out of US Treasuries and government debt, it can move the needle a lot on gold.
At this point Wall Street is falling over each other trying to up their gold targets. Goldman says 2700, Bank of America says 3000 by next year, UBS is saying 4000 in the next “2 to 3 years.”
If that ends up happening, we could potentially see the price of gold triple. That would be the largest rally for gold since the housing bubble burst in 2008.
In conclusion, the author of the report notes that gold is a form of insurance. With the world being so poorly run at this point in history, having gold is a “last line of defense,” a truth investors are finally realizing.
"*" indicates required fields