To paraphrase Kitco’s Neils Christensen, “…what investors have been waiting for has arrived” — gold pushing through the $1,900 level and moving into positive territory for the year.
Gold finished up a good week in the New York spot and the August futures markets yesterday, closing at $1,904.50 and $1,906.30, respectively.
Spot gold’s $27, 1.4% rise this week is its best monthly gain since July — it’s up $103, or 6.8%, in May — turned its movement positive for the year.
And now, its momentum is poised to push prices to $2,000 and above by the end of the year, sweeping aside the skepticism — and manipulation — of gold bears.
According to many analysts, gold's rally is just getting started, particularly as threat of rising inflation spreads.
By Dave Allen for Discount Gold & Silver
Confession…I’m a sucker for Steven Spielberg movies.
One of my favorite scenes in the maestro’s movie Hook comes during the Lost Boys’ storming of Capt. James Hook’s ship as part of a valiant effort to overrun the pirates holding Peter Pan’s son and daughter hostage.
In the act’s penultimate climax, one of Pan’s young disciples yells with the inspiration of a seasoned warrior, “We got ‘em on the run now, Lost Boys!”
That’s kinda what I feel precious metal investors are shouting to one another this holiday weekend, “We got ‘em on the run” — referring to defensive gold bears instead of Hook’s minions.
To paraphrase Kitco’s Neils Christensen, “…what investors have been waiting for has arrived” — gold pushing through the $1,900 level and moving into positive territory for the year.
Gold finished up a good week in the New York spot and the August futures markets yesterday, closing at $1,904.50 and $1,906.30, respectively.
Spot gold’s $27, 1.4% rise this week is its best monthly gain since July — it’s up $103, or 6.8%, in May — turned its movement positive for the year.
And now, its momentum is poised to push prices to $2,000 and above by the end of the year, sweeping aside the skepticism — and manipulation — of gold bears.
According to many analysts, gold's rally is just getting started, particularly as threat of rising inflation spreads.
A Chorus of Bulls
On Thursday’s Financial Survival podcast, Dgscoins President and CEO Melody Cedarstrom and I talked about European asset management firm Incrementum AG’s annual In Gold We Trust report.
It it, they — like many other economists and analysts — see upward-ticking inflation as just getting underway, and, as Incrementum warns, we haven't even seen higher money supply velocity kick in yet.
The bottom line is that even if rising inflation turns out to be “transitory,” as the Fed sees it, a rise from below 2% (as measured by the government; it’s actually 3-4 times that rate, but that’s another story) to say 5 or even 6% could last well into 2022 and beyond, with no assurance it will stop or drop.
(Remember, inflation is never transitory in a nation with fiat currency. By definition, prices always increase in the aggregate, even if just by 0.1% a month. Thus, the debate is just about how much prices increase.)
As inflation picks up in the coming months, Incrementum sees a path for gold to hit $5,000 in the near term on its way to $8,900 or more by the end of the decade.
(A price of $9,000 implies an annual average return on an initial investment of $2,000, of roughly 50%. How’s that for a store of value in a world plagued by stronger inflation?)
In the meantime, Incrementum says that with the growing inflation threat, there’s a 45% chance that gold will hit new all-time highs by the end of 2021 – implying a price north of $2,070 an ounce by December 31st.
Other credible company officials are calling for five-digit prices down the road as well:
Guggenheim's CIO Scott Minerd recently said that he sees gold between $5,000 and $10,000 as investors leave their ever-growing volatile, speculative cryptocurrencies behind.
(From this week’s American Survival newsletter: Bitcoin has lost 2.5% or more once every four weeks on average over the past two years compared to once every 12 weeks for the S&P 500 and NASDAQ — and once every 13 weeks for gold.)
Lee Munson, president and CIO of Portfolio Wealth Advisors, said he sees gold going to $2,200 during the current money printing cycle.
Munson says, “I buy [gold] because when there's a crisis, and I think the central banks are going to print money like there's no tomorrow, that's the time when I want to have a larger holding of gold.”
CEO of Sprott Peter Grosskopf said he’s also expecting to see record highs in gold by the end of the year (Sprott manages the Sprott Physical Gold and Silver Trust).
This growing consensus of optimism is reflected in Kitco’s weekly investor survey that shows 57% of Wall Street analysts are bullish on gold in the near term, while 67% of retail investors, like you and me, are bullish.
A Bonus Perspective
And, before we head into the heart of the weekend, let’s take a brief look at an interesting viewpoint that SeekingAlpha’s Victor Dergunov has on the normally strong correlation between gold and the monetary base.
He writes that while the U.S. monetary base, as measured by the Fed’s balance sheet, is up by around 600% over the last 13 years (i.e., since the Great Recession), gold’s price is up by just 200%.
In other words, if gold had appreciated as the monetary base did over that period, gold should be around $5,600 an ounce right now instead of a little over $1,900.
Some might scoff at this, but I look at Dergunov’s analysis simply as confirmation of the several other factors affecting the movement of gold’s price over time, while viewing gold as a lagging indicator of the monetary base.
The point is, gold is proven and established. It’s is an effective, tried and tested investment tool.
It’s been a source of returns rivaling that of the stock market over various time horizons. It’s performed especially well during periods of rising inflation and low real interest rates.
It’s been a liquid, established market. And it’s acted as an important portfolio diversifier and hedge.
As financial markets continue to evolve and new technologies are created, gold’s distinctiveness and its vital role in providing financial security make it thee compelling, long-term, strategic investment.
Let’s take it one step further…
Given all the positive signs pointing to a steady and long-term rise in the price of gold, we believe that the FOMO phenomenon — the Fear of Missing Out — will ring loud among investors in the weeks ahead.
Which means if you’re not adding significant amounts of gold (and silver) to your portfolio, the fear of missing out will turn out to have been a self-fulfilling prophecy.
P.S....did I mention the Lost Boys propel Pan to victory in the end?