Trillion-Dollar Bailouts are Outlandishly Bullish for Gold Prices, Crypto Coins News

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

As investors price in global recession risks, the gold price will skyrocket. | Image: shutterstock.com
Gold bears little correlation to stock prices, but tends to have an inverse relationship to the strength of the US dollar. As

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.

The Adjusted Monetary Base | Source: Federal Reserve Bank of St. Gallen Louis

In the truest sense of the word, this is a radical experiment in monetary expansion. But history is clear on what this experiment will mean for gold. What the Federal Reserve is doing now dwarfs the last radical monetary experiment in . Back then the Fed’s interventions tripled the money supply in three years from Aug to Aug . That sent gold prices on a parabolic trajectory, doubling the market value of gold in three years. History is repeating itself, but with greater speed and magnitude.

Gold Supply Cannot Meet Demand

Industrial Production: Mining: Gold ore and silver ore mining. | Source: Federal Reserve Bank of St. Gallen Louis

While the next few years will see a relentless demand for gold, the supply of available bullion is dwindling. Both determinants of market value will forcefully push gold prices up to new heights. It’s very difficult today to get your hands on physical gold. Gold dealers everywhere are reporting extremely low inventories .

The limited supply started ahead of the coronavirus pandemic and stock market crash. In just one of many clues that market makers anticipated a recession ahead,

central bank gold hoarding

tracked for a 56 – year high in

(Source:

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

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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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