You’ll Want to Own Some Gold in 2019/2020
Dear Reader,
You can feel the excitement: after a terrific finale to 2018 and a promising start to 2019, precious metal investors are revved up for what’s bound to be a pivotal year in gold. The economic factors that favor gold are numerous, but there are particular gold-positive elements that I’ll be watching extra closely in the coming months.
Before we address the fundamental macroeconomic factors, it’s worth mentioning the technical aspects of the recent price action in gold vs. the U.S. dollar. Finally breaking above the psychologically significant $1,300 resistance level has set the stage for more barriers to be broken:
If you’ve been in the precious metal market long enough to remember gold’s exhilarating run from 2009 to 2011 when gold reached the $1,900 level, you know what gold is capable of when it gathers up steam. Don’t be surprised if the $1,400 and $1,500 levels come swiftly now that $1,300 has been breached.
On a less technical level, Asian economies like China, India, Russia, and Iran have been dumping dollars (which are, after all, U.S. debt notes) and accumulating gold in its stead – a trend that has not slowed down as we enter the new year.
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Central European nations, and particularly Hungary and Poland, have been accumulating their gold reserves as well. Less global demand for dollars and greater demand for gold are doubly bullish for gold since we tend to measure it against the dollar.
Price inflation will, as expected, continue unabated throughout 2019. CPI figures grossly misrepresent dollar price inflation, which has actually been averaging around 8% annually since gold’s peak in September of 2011.
With due bemusement, I’m watching for the Federal Reserve to accelerate the pace of its long-standing money-printing addiction. Let’s face it: no one is really expecting the Fed to control the trajectory of the FMQ (fiat money quantity), which has gone almost completely vertical since the commencement of the quantitative easing experiment:
I’m watching for the U.S. dollar to remain under considerable pressure all year long. This will be triggered by investors’ concerns about global economic growth, contention in a divided U.S. Government, and the ongoing trade war between the U.S. and China – all of which are net gold bullish.
Plus, there’s the return of the Powell put: Fed Chair Jerome Powell has no particular desire to cause another bear market in stocks – like the one that happened in the fourth quarter of last year when he threatened to raise interest rates four times in 2019.
Under pressure from President Trump, Chairman Powell halved his projection of four rate hikes to just two, and it wouldn’t surprise me at all if there are zero interest rate hikes, or even a rate cut.
Besides, with international trade contracting and the U.S. budget deficit increasing exponentially, watch for the domestic economy to slump. This will provide the perfect excuse for a whole new round of quantitative easing, with Treasury yields in the gutter and gold free to move higher.
Actually, quite a few things will be in the gutter in 2019: bond yields, the global economy, the dollar, faith in the government… but if you’ve got gold, it won’t all seem so bad after all. As the world’s economy pivots and investors pile into precious metals, faithful gold stackers can sit back, watch the freak show, and rest easy with a comfortable stake in the world’s greatest financial asset.
Best Regards,
Daniel Ameduri
FutureMoneyTrends.com
Editor’s Note: I’ll be making this a core position for myself and family.
93% Of Investors Generate Annual Returns, Which Barely Beat Inflation.
Wealth Education and Investment Principles Are Hidden From Public Database On Purpose!
Build The Knowledge Base To Set Yourself Up For A Wealthy Retirement and Leverage The Relationships We Are Forming With Proven Small-Cap Management Teams To Hit Grand-Slams!
Legal Notice: This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.
