Why is gold so bullish you ask?
BRICS & de-dollarization:
BRICS members have been creating their own digital gold backed currencies to settle international trade deals in order to 'ditch the dollar'. China settled their first lng trade in Yuan March 2023. Petro dollar is slowly being replaced by the petro yuan. Brazil and Russia are now accepting trade settlements and investments in yuan.
Yield curve inversion & housing market:
The 10 and 2-year Treasury bond yield curve inversion insinuates a US recession is inevitable. 30 year fixed mortgage rates are currently floating at 2008 highs. The last time US 30 year fixed mortgage rates were this high, the US housing market crashed. Credit default swaps are currently at all time highs. CFTC shows that leveraged funds have large net short positions across several Treasury futures contracts, including a record short in the 10-year note.
US banking crisis & rate hikes.
Banking crisis contagion is still real. Pacwest, Western Alliance, First Horizon, Homestreet, and Bank of America are still in a catastrophic sell off. Powell raised interest rates by a whopping 25bps. Subsequently, Pacwest tanked -90% and Western Alliance was down -50%. High interest rates are most definitely accentuating the banking crisis, and we could potentially see the banking crisis exacerbate in the very near future.
US compromised safe haven status & debt ceiling dilemma:
The illegal seizure of Russian US assets conducted by the US government, compromised US as a safe haven asset. This discourages other countries from relying on the US as a safe haven asset. The debt ceiling dilemma further adds to the risk of investing in US Treasury securities. The catastrophic ripple effect from US defaulting and not being able to pay capital owed to bondholders would be irreversible. Unemployment would rise +8%. The idea of USD being 'safe Haven' and 'reserve currency' would seize to exist.
US potential conflicts 2023:
Russia’s major invasion of Ukraine in February of 2022, led to a massive increase in US support for Ukraine. US troops have been deployed in Ukraine. Biden had committed nearly US$80B in aid to Ukraine.
North Korea missile tests, led to US president Biden threatening nuclear war against North Korea.
China and Taiwan conflict, led to US president Biden to threaten to defend Taiwan against Chinese invasion . This is what it would cost the US, if China was to cut them off. By 2025, $190 billion a year in in U.S. output by expanding 25% tariffs to all trade with China. In the coming decade, full implementation of such tariffs would cause the U.S. to fall $1 trillion short of potential growth. Up to $500 billion in one-time GDP losses if the U.S. sells half of its direct investment in China. American investors would also lose $25 billion a year in capital gains. $15 billion to $30 billion a year in exported services trade if Chinese tourism and education spending falls to half of what it was prior to the coronavirus pandemic.
US depleted oil reserves:
After US withdrew a historic 180M barrels of oil, US oil reserves are at 4-decade-low. Considering US is on the cusp of starting World War 3, US will need to refill reserves in case of emergency. Oil price is currently around US$70 a barrel. An additional Saudi surprise oil production cut or US engages in warfare, could potentially send oil price to the moon. Saudi's have formally applied to join BRICS. US is currently at risk of engaging in warfare with more then one BRICS member. Saudi's are in complete control of oil price. In order for US to fill reserves, US will require oil price below US$80 a barrel. However, if the Saudi's continue to cut oil production, US will be forced to purchase oil at whatever price, regardless of Biden's budget.
US gdp:
US has one of the highest gdp/debt ratios and is currently +120%. US total debt is approximately US$31.46 trillion. 2022 US gdp reported two quarters of negative growth, and 2023 Q1 gdp growth decreased to 1.1%. Technically, when considering 2022 gdp data, during 2022 US experienced a mild recession. Q1 of 2023 US economy has been in a downward spiral of failure like never seen before in US history. The feds insinuate US will experience a 'mild recession' in 2023. I would insist, and when considering the macroeconomic data and geopolitics, 2023 recession will be one of the worst in US history.
Conclusion:
Compromised safe haven status, potential conflicts, depleted oil reserves, BRICS de-dollarization tactics, risk of recession, high rates, risk of default, yield curve inversion, high gdp/debt ratio, and a decline in gdp growth is super bearish for the dollar. In turn gold price will steadily increase, and gold miners profit margin will also steadily increase. This could potentially result in a substantial increase in earnings and industry average p/e ratio for gold miners. Gold price has unlimited potential. Considering geopolitics and US macroeconomic data, I wouldn't be surprised to see gold price over $2,100 by end of 2023.
T some p's 2048 and then 2070, lfg.
BRICS & de-dollarization:
BRICS members have been creating their own digital gold backed currencies to settle international trade deals in order to 'ditch the dollar'. China settled their first lng trade in Yuan March 2023. Petro dollar is slowly being replaced by the petro yuan. Brazil and Russia are now accepting trade settlements and investments in yuan.
Yield curve inversion & housing market:
The 10 and 2-year Treasury bond yield curve inversion insinuates a US recession is inevitable. 30 year fixed mortgage rates are currently floating at 2008 highs. The last time US 30 year fixed mortgage rates were this high, the US housing market crashed. Credit default swaps are currently at all time highs. CFTC shows that leveraged funds have large net short positions across several Treasury futures contracts, including a record short in the 10-year note.
US banking crisis & rate hikes.
Banking crisis contagion is still real. Pacwest, Western Alliance, First Horizon, Homestreet, and Bank of America are still in a catastrophic sell off. Powell raised interest rates by a whopping 25bps. Subsequently, Pacwest tanked -90% and Western Alliance was down -50%. High interest rates are most definitely accentuating the banking crisis, and we could potentially see the banking crisis exacerbate in the very near future.
US compromised safe haven status & debt ceiling dilemma:
The illegal seizure of Russian US assets conducted by the US government, compromised US as a safe haven asset. This discourages other countries from relying on the US as a safe haven asset. The debt ceiling dilemma further adds to the risk of investing in US Treasury securities. The catastrophic ripple effect from US defaulting and not being able to pay capital owed to bondholders would be irreversible. Unemployment would rise +8%. The idea of USD being 'safe Haven' and 'reserve currency' would seize to exist.
US potential conflicts 2023:
Russia’s major invasion of Ukraine in February of 2022, led to a massive increase in US support for Ukraine. US troops have been deployed in Ukraine. Biden had committed nearly US$80B in aid to Ukraine.
North Korea missile tests, led to US president Biden threatening nuclear war against North Korea.
China and Taiwan conflict, led to US president Biden to threaten to defend Taiwan against Chinese invasion . This is what it would cost the US, if China was to cut them off. By 2025, $190 billion a year in in U.S. output by expanding 25% tariffs to all trade with China. In the coming decade, full implementation of such tariffs would cause the U.S. to fall $1 trillion short of potential growth. Up to $500 billion in one-time GDP losses if the U.S. sells half of its direct investment in China. American investors would also lose $25 billion a year in capital gains. $15 billion to $30 billion a year in exported services trade if Chinese tourism and education spending falls to half of what it was prior to the coronavirus pandemic.
US depleted oil reserves:
After US withdrew a historic 180M barrels of oil, US oil reserves are at 4-decade-low. Considering US is on the cusp of starting World War 3, US will need to refill reserves in case of emergency. Oil price is currently around US$70 a barrel. An additional Saudi surprise oil production cut or US engages in warfare, could potentially send oil price to the moon. Saudi's have formally applied to join BRICS. US is currently at risk of engaging in warfare with more then one BRICS member. Saudi's are in complete control of oil price. In order for US to fill reserves, US will require oil price below US$80 a barrel. However, if the Saudi's continue to cut oil production, US will be forced to purchase oil at whatever price, regardless of Biden's budget.
US gdp:
US has one of the highest gdp/debt ratios and is currently +120%. US total debt is approximately US$31.46 trillion. 2022 US gdp reported two quarters of negative growth, and 2023 Q1 gdp growth decreased to 1.1%. Technically, when considering 2022 gdp data, during 2022 US experienced a mild recession. Q1 of 2023 US economy has been in a downward spiral of failure like never seen before in US history. The feds insinuate US will experience a 'mild recession' in 2023. I would insist, and when considering the macroeconomic data and geopolitics, 2023 recession will be one of the worst in US history.
Conclusion:
Compromised safe haven status, potential conflicts, depleted oil reserves, BRICS de-dollarization tactics, risk of recession, high rates, risk of default, yield curve inversion, high gdp/debt ratio, and a decline in gdp growth is super bearish for the dollar. In turn gold price will steadily increase, and gold miners profit margin will also steadily increase. This could potentially result in a substantial increase in earnings and industry average p/e ratio for gold miners. Gold price has unlimited potential. Considering geopolitics and US macroeconomic data, I wouldn't be surprised to see gold price over $2,100 by end of 2023.
T some p's 2048 and then 2070, lfg.