2019 has been a great year for our clients.
And we think 2020 will be even better.
Others agree. In fact, Congressman Ron Paul thinks gold will double, reaching $3,000 by the end of 2020.
That may be underestimating the power of this new bull market in gold. Just last week a mystery buyer spent $1.75 million in the options market betting that gold will hit $4,000 by June 2021.
In any case, the signs warning of higher gold prices are all around, as Congressman Paul says.
One of the warning signs we have written about is global de-dollarization. 2018 saw the most aggressive gold buying by central banks in 50 years. Although it is long before the numbers for the year are all in, we already know 2019 has surpassed record 2018 central bank gold buying. All the fundamentals driving this de-dollarization megatrend look to continue in force in 2020.
Another important warning sign is the compounding of global debt, on track to hit $255 trillion dollars by the start of 2020, just weeks from now. That’s almost three times the global GDP. Can it be paid back? Of course not. Debt is mounting faster than productivity. A dollar of new debt is not producing a dollar of growth. We call this “The Doom Loop,” a vicious circle that ends in a cataclysmic bust.
Think about this another way. Debt is exploding both in the US and around the world. And yet the Fed has cut interest rates three times this year? Something is not right.
If the demand for a good or service skyrockets and the supply stays the same, the price will have to rise. It doesn’t matter what it is– new homes or prime rib or money. It’s the law of supply and demand.
But borrowing (debt), the demand for money, is climbing, while the price of borrowing money (interest rates) keeps falling.
And in fact, the only way debt can be rising and rates falling is if somebody is printing more money. So, let us call your attention to the manic new Fed money printing underway as we write. Just last Tuesday, 12/3, the Federal Reserve added close to $100 billion in new liquidity to the financial markets. Add to that the new Quantitative Easing (called by the Fed chairman “Not Quantitative Easing”) of $60 billion a month.
It will all play out with the dollar losing more value. Which will drive even more global de-dollarization. And a tightening of The Doom Loop.
We encourage you to look ahead to the coming year. And take steps now to protect yourself and profit with precious metals in 2020 and beyond.