- Gold prices don’t yet reflect the radically shifted economic outlook.
- Debt-funded, multi-trillion dollar stimulus programs will crush the dollar. Consequently the 2020s 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 $1,700 territory for the first time since 2012. 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. 2020 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.
Gold prices have not yet reflected the Federal Reserve dropping the mother of all monetary bombs on the 2020 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
Gold bears little correlation to stock prices, but tends to have an inverse relationship to the strength of the U.S. dollar. As the dollar supply steadily dwindled since its peak in 2014, the currency held strong over the last decade. As a result, gold prices declined from their 2011-12 peak in the high $1,700s. That could be about to change drastically.
Now the Federal Reserve has a $4 trillion…