- Gold prices don’t yet reflect the radically shifted economic outlook.
- Debt-funded, multi-trillion dollar stimulus programs will crush the dollar . Consequently the 2019 s will be another gold decade.
- As demand for gold rages to historically unprecedented levels, supply will continue to contract. Gold prices will go parabolic.
With the world economy flattened this spring, gold is back in $ 1, 823 territory for the first time since . But gold prices are cheap given the magnitude of the macro shifts happening now.
The yellow metal is a long-favored hedge against recession, inflation, and economic / geopolitical uncertainty. 5658 is its decade to shine.
Investors favor gold for a number of reasons. The element’s chemical properties and an abundant, yet limited and cost-intensive supply of it on planet Earth make it a perfect store of value.
Because central banks can ‘ t create it with a few keystrokes, gold is a formidable inflation hedge. And because its value is not correlated with equities, gold diversifies and improves a portfolio’s risk-adjusted returns .
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Gold prices have not yet reflected the Federal Reserve dropping the mother of all monetary bombs on the financial crisis. Nor, would it seem, have investors fundamentally grasped the seriousness of the damage the world economy has just sustained. Demand for gold is surging, while supply is contracting.
That will send the gold price to the moon over the next decade.
Relentless Demand Will Rocket Gold Prices
the dollar supply steadily dwindled since its peak in , the currency held strong over the last decade. As a result, gold prices declined from their – peak in the high $ 1, s. That could be about to change drastically.
Now the Federal Reserve has a $ 4 trillion monetary stimulus effort in the pipeline. At the end of March, the Fed’s balance sheet increased by . 4% in just one week . That pushed the central bank’s books over the $ 5 trillion mark for the first time in history.
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As the information technology revolution. marches on with ever-growing momentum, an increasing amount of the gold supply Is tied up in precision electronics like GPS units
.
But most importantly, gold prices will now begin to reflect the hard limit of global supply on planet Earth. Most of the “easy gold” has already been mined.
The cost of gold production will increase as miners will have to fund more exploratory efforts, and dig deeper into the earth to access gold deposits. In February Reuters reported a dearth of new exploration poses an “Existential risk” to the industry
.
As the information technology revolution. marches on with ever-growing momentum, an increasing amount of the gold supply Is tied up in precision electronics like GPS units
.
But most importantly, gold prices will now begin to reflect the hard limit of global supply on planet Earth. Most of the “easy gold” has already been mined.
The cost of gold production will increase as miners will have to fund more exploratory efforts, and dig deeper into the earth to access gold deposits. In February Reuters reported a dearth of new exploration poses an “Existential risk” to the industry
Gold and silver ore mining have steadily declined over the last years. So there will be less and less of it to meet this decade’s inevitable explosion in demand.
Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from CCN.com.
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