ALERT: Gold Will Surge Well Above $2,000 As Bull Market In Gold Is Only Beginning
ALERT: Gold Will Surge Well Above $2,000 As Bull Market In Gold Is Only Beginning from King World News
As we move through trading in the back half of December, one of the greats in the business said the price of gold will surge well above $2,000 as the bull market in gold is only just beginning.
Since The Great Financial Crisis Started
December 16 (King World News) – John Ing: For much of the past half century, the dollar was as good as gold, but in 1971 the Fed abandoned the gold standard and unfettered by the gold backing, the Fed created so many dollars that much of the world’s commerce trades in greenbacks. America’s fiat financial hegemony also allowed the US government to print money to wage wars, pay its bills and consume more than it produces. The US as a result has been living beyond its means for over a half century. America was allowed to borrow from abroad forever, contributing to the Great Inflation of the 70s, the financial crisis of the 80s, and the dot-com bubble in the 90s. And, America racked up more debt to fight wars ($7 trillion for Iran and Afghanistan alone), exacerbated by the 2008 financial subprime crash which led to the need for Wall Street’s bailout that cost billions and now trillions of fiscal stimulus.
That easy money created by the rounds and rounds of quantitative easing was supposed to fund growth after the financial collapse in 2008, but instead caused the Fed’s balance sheet to explode from 6 percent GDP in 2008 to over 18 percent this year. Wall Street is less concerned about America’s troubled public finances and that government debt has spiraled out of control. Investors too seem unconcerned about whether they will be repaid. Yet the stock market posts new record highs, again and again.
In inflating asset bubbles, the Fed became a creator of money rather than a steward. The Fed’s experimental tools like quantitative easing, meant massive multi-trillion bond-buying programs to bring about near zero rates. Recent developments have laid bare the problems of this experimental program. Deficits don’t seem to matter, although as a percentage of GDP it is more than 4 percent now. However the present system is breaking down, while deficits keep rising.
There is a cost, a tipping point. The US has become the largest debtor in the world, jeopardizing the dollar’s status as the world’s reserve currency, particularly at a time when the US and China are going in different directions. China has become the world’s largest buyer of energy, most commodities and is doing more business in euros, rubles and yen, but not the dollar. China is setting prices and its dedollarisation has shifted to gold. Of note is that China is also the largest foreign holder of US debt. We believe the president’s spiraling trade and currency wars threaten to topple the dollar’s supremacy, which depends upon not just America’s economic or military prowess, but also the strength of its institutions. It is precisely these pillars that Mr. Trump is eroding.
US Repo Market Meltdown – Déjà vu
Negative interest rates began in Sweden in 2015 when the Riksbank lowered interest rates and the sugar rush of lower rates sparked a housing boom with prices climbing 15 percent. Inflation too picked up, but debt rose faster. Four years later, however it is a different story. Prices are off some 10 percent and inflation too has declined from two percent to 1.5 percent. The honeymoon is over and left is a bigger debt. The Swedish Central Bank has reversed course, ending the negative rate experiment. Negative interest rates, like cheap money was not the panacea. Yet negative rates have spread from Sweden to Europe to Japan as governments pressure their central banks to lower rates or intervene in currency markets to gain a competitive advantage. This time the next financial crisis, we believe will be triggered by the central banks…