The Midas Touch: Will Gold Continue to Shine?

The Midas Touch: Will Gold Continue to Shine? by Mark Skousen for TownHall

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“The impact of the rate of inflation on the price of gold is like tracking the footprints of an animal.” — Julian M. Snyder (“Maxims of Wall Street,” p. 151)

Gold gradually has been moving up in fits and starts in 2020, but suddenly has taken off, and it hit $1,800 an ounce earlier this week. Silver is over $18 an ounce. See the chart below.

As you can see, gold has been a more stable growth investment than stocks or oil in 2020.

Investors are wary of the stock market and the economy, especially after Dr. Doom, American economist Nouriel Roubini, predicted this week that we would see a bad recovery and a “Greater Depression,” to use the phrase made famous by Doug Casey.

Three Reasons Why I’m Loading Up on Gold

What is driving gold higher?

There are three reasons why I’m bullish on gold and have substantially added gold and mining stocks to my investment portfolio.

First, the Federal Reserve and other central banks have cut interest rates to practically zero. That makes gold, which doesn’t pay interest, more appealing. Some mature mining stocks do pay dividends, but usually only 1-2% a year.

Second, the Fed also has expanded the money stock with quantitative easing (QE), buying Treasury securities, mortgages and corporate bonds to stimulate the economy during recession.

In fact, the broad-based U.S. money supply (M3) is now growing at a 25% rate, the fastest rate in peacetime history!

Source: Tim Congdon, Institute of International Monetary Research

Third, government spending is out of control, causing the deficit to rise to $5 trillion or more. The Fed will undoubtedly increase purchases of government bonds to keep interest rates low.

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Rory Hall, The Daily Coin and Gospel News Network. Beginning in 1987 Rory has written over 1,400 articles and produced more than 500 videos on topics ranging from the precious metals market, economic and monetary policies, preparedness as well as geopolitical events. His articles have been published by Zerohedge, SHTFPlan, Sprott Money, GoldSilver, Gold Seek, SGTReport, and a great many more. Rory was a producer and daily contributor at SGTReport between 2012 and 2014. He has interviewed experts such as Dr. Paul Craig Roberts, Dr. Marc Faber, Eric Sprott, Dr. Warren Coates and Peter Schiff, to name but a few. Don't forget to visit The Daily Coin and Gospel News Network to enjoy some of the best economic, precious metals, geopolitical and preparedness news from around the world.