Like many market observers, I am expecting a full-blown disaster to come whirling through our economy in the not-so-distant future. It will not be a simple stock market correction - or even a stock market crash. It will be worse than your run-of-the-mill mortgage crisis and is more severe than any sort of typical credit crisis. No, this time it will be a legitimate currency crisis.
The last currency crisis was seen during the Weimar Republic in 1919, and the only notable one before that occurred in France, via John Law's Mississippi Company. Having spent the last two weeks trying to understand all the elements that lead to a currency crisis, I have learned only one important takeaway - own physical gold before it happens. While society degenerates for everyone under such circumstances, having some gold (real money) before the insane "appreciation" begins will make things a bit better for those lucky few.
So, since this post is more about gold's recent and future price action, and less about a 10-year currency ruination by our beloved Fed, I will discuss the important parts of the chart above:
1) Accumulation is at all-time highs. This is extremely useful to know because it means that this recent surge is NOT a pump and dump. Unlike all the past gold rushes over the last 40 years, this one actually involves holding the physical asset, rather than paper trading ethereal futures and forwards contracts. Moreover, it means that you can buy and hold gold now without the fear of losing half of it in a month's time.
2) While physical gold is the way to go, you can also trade it on the side. Thus, it is good to know what our current price channel looks like. The bolded royal blue lines denote the start of the current trend, which, unsurprisingly, began right when the Fed declared that it will be printing trillions of USD. The word "Trillions" is so ridiculously large that even non-market participants are thinking "inflation is coming." Use this trend for the next two months unless an even more parabolic trend emerges.
3) For those that want to trade contracts over the next two weeks, see the green price trajectory. This is very likely the general path it follows - just look to any Wave II correction in the past five years for evidence.
I will probably make other gold posts (silver too) as the price action materializes into a parabola - but this should be a good starting point for those curious about the recent moves in gold (and other metals). Even if there is a crisis, it's all relative to gold in the end.
What do you think about gold in 20-50+ years when our technology advances and will be able to mine deeper: at the core of the earth or space objects like asteroids? Gold, rare earth and other heavy elements have very high concentration closer to the earth core. Another possible source is artificial synthesis of precious metals in fusion reactors, particle accelerators.
Of course it is very hard and will take years, if not centuries, but let's imagine it is possible, though expensive.
Would be interesting to hear your thoughts about that.
This is a utopian case, but if you really keep precious metals for a long time, it's silly not to consider such scenarios, even if they sound fantastic now.
UnknownUnicorn5511258
⋅
@FelixTheWhale1, oh boy, I have legitimately no idea. I'd venture to say that we would sooner attempt to procure gold from another planet before trying for the Earth's core. I only say this because of the apparent trend towards space exploration and the high likelihood of gold existing on nearby planets (only because an asteroid collision is what put gold on Earth in the first place).
Otherwise, my focus is for gold (silver even more-so) to achieve a spot price of 10,000 USD by mid-next year (200-300 for silver). I know it sounds crazy, but its even crazier how cheap they are based on basic math. Simply put, if you divide the number of mined ounces of gold/silver in circulation over the amount USD in circulation, then you arrive at an actual supply/demand price reconciliation of 34,000/oz in gold and 4,300/oz in silver.
Not to go too off-topic from your point above, but what's even crazier is that silver demand is currently increasing so rapidly at the moment (mostly due to freezer demand lol) that the one or two silver miners that are actually still operable are absolutely not going to be able to meet anywhere close unless the price increases significantly and quickly.
Now, if the last remaining true silver miners go broke from manipulated spot prices, then add it to the list of irritating circumstances in today's idiot economy.
FelixTheWhale1
⋅
@Perma_Pig, thanks, interesting point.
Silver price target looks a bit too high, but ok, what about miners and why they will go bankrupt? I think in this scenario everything will go the other way round: share price goes up proportionally to the silver and production/mining volumes plus possible unexplored metal deposits. If they do not have enough money, they will issue more shares to expand production. Thus, it is a snowball effect in a bullish market
About the threat of PM being digged not in the earth, I would recommend to consider cheaper and heavy metals like copper or silver, because it will be very expensive to transport huge volumes of them from other Planets (to transport 1 kg to the orbit, it costs ~100 Oz of silver or 2000€, but only 1 Oz of gold and may be profitable for space companies)
Duddle_In_a_Puck
⋅
Incredible, seriously this is astonishing.
goldenkat
⋅
great post H ! I'm using charles swab , is it any ways i can buy gold contract ? need to open the future account ? and how about crypto ? appreciate it :)
mahalo ,
UnknownUnicorn5511258
⋅
@katgold, hmm, that I do not know. i think you have to make a separate request for futures and forwards. GLD is as good an alternative to actual spot price as it gets, but it's not ideal.
goldenkat
⋅
@Perma_Pig, it will need much money to buy physical Gold , if i buy long term future contract for GOLD should be good right master :)?
Stone881
⋅
@katgold, I trade with Schwab and yes you need to request a futures account. My recommendation, don't do it. Trading PM futures, in particular, is only for professionals with very well funded accounts. If you want leverage then use the ETFs.
goldenkat
⋅
@Stone881, thank you ,i think if trade i just buy contract for GOLD :)
Of course it is very hard and will take years, if not centuries, but let's imagine it is possible, though expensive.
Would be interesting to hear your thoughts about that.
This is a utopian case, but if you really keep precious metals for a long time, it's silly not to consider such scenarios, even if they sound fantastic now.