Gold at $ 15,000!

By Aristos | cryptobot | 6 Aug 2020

The hunt for security, the "printing" of money by central banks and speculative demand. The correlation with the dollar and fears of reliability. What alternatives can investors look for?

Exceeding $ 2,000 in gold brings us to a dilemma. Are we experiencing the phase that his fanatical supporters have been waiting for for years or is it an upward outburst that makes it unreasonably expensive? Of course everything falls sometime, but waiting for it to correct, you have lost the gains of the rise.

As we do not have the crystal ball that reads the future, we will be content with historical data . The first and most important thing is that in the markets nothing (or almost nothing) happens by chance. When something seemingly unprecedented happens, it is preceded by a more or less obvious process. No new highs are achieved for no reason. Not just precious metals, but everywhere.

Is it worth buying now?

The Ray Dalio , the manager of the largest fund on Wall Street, argues that if we do not have in our possession gold, we do not know history or economics.

Nice Ray, let's buy. But never; In terms of price, it would be better to have bought several weeks or even months ago. The signs have been there ever since, we mentioned them .

But now that opportunity has passed. Let's go for the second best opportunity and to find out the price is a secondary issue. Success will come if you succeed at the right time . You buy gold as an insurance policy.

When is the right time to buy "insurance"

Shortly before the catastrophe broke out. Acquiring it is not just a matter of enrichment, but of protection . When you buy the quantity that you consider satisfactory to fulfill its capacity as an insurance valve, then you add, if you wish, for speculative reasons.

The previous rally

From the low of 1999 to the high of 2011, gold multiplied its value against the dollar 7 times. Many claim, not unfoundedly, that things are even worse than when the dot.com bubble of 2000 and the mortgage bubble burst in 2008. If we think about it that way, it makes sense to look much higher in gold.

From August 1971, when the Golden Rule ended , to the peak of 1980, it multiplied 22 times. If we calculate the average of the two periods, we get 10 years of growth and 1500% growth. Given that the bottom was 1050 in 2015, this means that by 2025 (in 5 years from now) gold will approach $ 15,000.

Of course there can be no prediction accuracy, but neither is it needed. Our goal is to catch the sign and the power. The others are estimates. In investments, the advantage in the race has anyone who has been placed correctly .

So far there has been a speculative demand . The real rise will be if we look at monetary demand. This is not the first time that changes in the monetary balance have turned the world towards gold. The big profits came from 1971 to 1980 at which time gold was converted from a fixed asset to a speculative one.

The world population may have been half in 1971 but only 10% had the opportunity to acquire gold. The majority were out of the game . The Russians could not, at least legally, because the Soviet regime still prevailed. The Chinese do the same. Apart from legal restrictions they were very poor then. Even in some western economies the possession of gold was forbidden. In Australia, for example, it was allowed in 1976.

Some analysts estimate the access population to be 17 times larger than at that time. However, the quantity offered has increased at the same time . Indeed, it has doubled. But again the ratio is clearly in favor of demand.

How reliable is the dollar

In 1932 Dow Jones units equaled the price of an ounce of gold. In 1980, it was worth it again! Today the index is at 26,000 points. If there is a big correction by then, we see that 15,000 does not seem so absurd. But if inflation does not subside, gold may be worth even more. Gold will not go up. The purchasing power of the dollar is what will decline.

Surely the $ 15,000 price tag sounds shocking. Even more shocking is the fact that the Fed "printed" more money in June than in the first two centuries since the founding of the United States. And they still "print". And it is unknown how long they will continue.

Central banks have shaken up the notion of money scarcity. They have indulged in a legalized version of counterfeiting . It takes a few seconds for the Fed or the ECB to make a trillion - a number with 12 zeros. How long does it take to spend this amount?

If you constantly spend 100 euros per second, 2370 will be used up.

Who can really rule out how we are approaching some form of Gold Rule or how gold will be used as a basis for comparison rather than the dollar? Certainly not Goldman Sachs . Concerned about the possibility of rising inflation in the US, its analysts warned that the dollar is in danger of losing its status as a global reserve currency.

Is there an alternative to gold?

The price of futures or ETFs does not necessarily represent the price of natural gold. They are just an IOU. A certificate of possession, not the same. Many do not feel comfortable with this. If one wants to get the metal it must be paid with a premium . Silver and bitcoin are now more readily available in their natural form.

The bitcoin has most of the characteristics of gold, but this is a rare asset that exploits the advantages of the digital age. Ironically, the hardest asset is digital. Also on the plus side is that it is about 50% below its own peak.

Today, silver is trading at almost half price below its all-time high ($ 49.50 in April 2011). Based on its ratio to gold, it is only unlikely that it will reach 40, from the 78 it is today. Therefore to achieve double the yield in relation to gold.