Eight Reasons to Buy Gold: Part 2
Eight Reasons to Buy Gold: Part 2 By Nick Giambruno for Casey Research
Chris’ note: Gold is set to explode in 2020… but probably not for the reasons you think.
That’s why we brought in Crisis Investing chief analyst Nick Giambruno to show you why he thinks this will be a gold rush for the ages.
Yesterday, he gave us four reasons that explain why this surge is imminent.
And today, he has four more takeaways that make the case for why you should add gold to your holdings sooner rather than later. Check them out below…
By Nick Giambruno, chief analyst, Crisis Investing
Yesterday, I laid out four reasons for why this gold rally will be bigger than anything we’ve ever seen.
I explained how central banks are buying up piles of gold… how China is using the metal to remove its dependence on the U.S. dollar… and why the Fed’s shifting strategy is bullish for the sector.
Today, I’d like to dive deeper into what’s going to trigger this revival…
No. 5: Takeover Frenzy in the Gold Mining Industry
2019 was a big year for gold mergers and acquisitions (M&A).
The world’s largest mining companies poured billions of dollars into mergers and acquisitions.
Here are some of the biggest blockbuster deals this year:
- Barrick Gold acquired Randgold Resources in a $6 billion transaction that closed on January 1.
- Newmont Mining completed a $10 billion takeover of Goldcorp on April 18.
- Barrick Gold also announced a joint venture with Newmont after a hostile bid from Barrick failed. (Barrick and Newmont are the top two gold-producing companies in the world.) The joint venture in Nevada will create the largest gold-producing complex in the world.
- St Barbara acquired Atlantic Gold in July.
- Osisko Gold Royalties acquired Barkerville Gold Mines in November.
- Kirkland Lake Gold is acquiring Detour Gold.
What these mega deals prove is that the biggest companies in gold mining think gold and gold stocks are cheap.
They show a preference to grow by buying out other companies rather than discovering and developing new resources.
If this trend continues, 2019 will go down as a record-breaking year for gold M&As.
It’s another major tailwind for gold.
No. 6: President Trump Is Pro-Gold
President Trump is a big fan of gold.
For one, he’s made a killing as a gold investor. He’s called investing in gold “easier than the construction business.”
But Trump’s affinity for gold goes much deeper. He once said:
The legacy of gold as a precious commodity has transcended to become a viable currency and an accepted universal monetary standard. Central Banks around the world are holding gold as a reserve asset.
And Trump is a fan of the gold standard… in other words, the re-monetization of gold.
While running for president, he said:
Bringing back the gold standard would be very hard to do, but boy, would it be wonderful. We’d have a standard on which to base our money.
And he’s acting on his pro-gold instincts in a big way. Let me explain…
Trump has been able to wield more influence over the Federal Reserve than any other president since the Fed was created in 1913.
He’s had the chance to fill five of the seven seats on the Board of Governors of the Federal Reserve.
In other words, Trump gets to stack over 70% of the whole Fed board with people of his choosing.
And so far, he’s nominated several pro-gold candidates, including Herman Cain and Stephen Moore. They’re both on record as supporting a gold standard.
For example, in 2012, when Cain was running for president, he wrote an editorial for The Wall Street Journal titled “We Need a Dollar as Good as Gold.” He wrote:
Gold is kryptonite to big-spending politicians. It is to the moochers and looters in government what sunlight and garlic are to vampires.
Cain and Moore have since withdrawn their nominations. Trump ended up nominating Judy Shelton, who is also an advocate of the gold standard, and Christopher Waller.
The fact that Trump nominated Cain and Moore in the first place shows he is willing to act on his pro-gold instincts.