China’s Plan For A World Of Skyrocketing Commodity Prices And $20,000 Gold
As a huge shift in global power continues to take place, here is a look at China’s plan for a world of skyrocketing commodity prices and $20,000 gold.
China, Skyrocketing Commodity Prices And $20,000 Gold
Stephen Leeb: “Do you have nerves of steel? Or nerves more akin to limp pasta? Let’s hope it’s the former. For over the next month or two, a steely temperament that lets you buy gold even if its price drops further will give you the last laugh when the gold bull market takes off with even more velocity than I had expected before Trump’s election.
The election has changed the world dramatically. Today I’d give even higher odds that the Midas metal will climb into five-digit territory, possibly as high as $20,000 or more, within the next five years or so…
“But it also has meant that over the shorter-term gold might struggle and could even test $1,000. Treat this as an extraordinary buying opportunity.
The major reason gold has grown more vulnerable nearer term is that the shorter-term case for higher oil has grown weaker. As we explain below, this reflects the ramifications of Trump’s vehement anti-trade promises, which presumably he will keep, tearing up the Trans-Pacific Partnership (TPP) on day one. (Yes, Clinton also opposed it on the campaign trail but likely would have found a path to keeping much of it.) Look for China to leap into the gap. China sees enormous opportunity as the U.S. backs off from the deal, but to fully benefit, it needs oil prices to stay low for a while longer. And China has a lot of say over the matter.
The upshot is that for now it is possible that any deal to cut oil production could be a token face-saving effort that doesn’t reach even 1 million barrels a day. And this despite the fact that the Saudis at the start of 2015 were producing 9 million barrels a day compared to the 10.5 million barrels a day they currently produce. In other words, the Saudis on their own could cut enough to drive oil to at least $60 and probably much higher. So why are OPEC and other big producers like Russia likely to step back from the largesse higher oil prices would bring? Ironically it has to do with how much the longer-term picture has improved.