Great explanation, by Egon, of everything gold related, including transitory inflation, debt, and no exit door from governmental malfeasance. A very good read.
However, I do take issue with his modesty. His very conservative stance.
Egon states that $4,000 gold is achievable by the end of the decade.
It could conceivably reach that level in 6 months time.
What he fails to convey is gold’s potential to rise above and beyond levels witnessed by Bitcoin. I’m talking $50,000+. Perhaps significantly higher if all the dominoes line up:
– Gold backed Yuan
– Dollar’s loss of reserve currency status
– Massive domestic inflation from a deteriorating Dollar.
– Relentless debt accumulation, compounded with higher interest rates, making funding impossible.
– Major bank and corporate defaults leading to systemic collapse.
– Comex bankruptcy on FTD’s
– Bullion banks being squeezed for delivery.
– Geopolitical turmoil
– Ensuing hyperinflation to meet government obligations.
In my mind, gold’s bullish trajectory may happen through speculative fever initiated by the movement of excess liquidity draining from a plummeting bond market and collapsing equities, chasing a minimal amount of gold and silver to be had. Everyone scrambling toward a single exit door.
Or, it may simply be the repricing of gold to the Dollar’s death spiral. Cheaper Dollars buy less gold; need more Dollars to buy the same one ounce.
He also reminds us that “…nations with their backs against a debt wall is always the pursuit of inflation by design, not deflation.”
That is NOT transitory.
His disbelief in the “transitory” premise got me thinking…
I just realized……I’m transitory!
CIGA Wolfgang Rech
There is no point in making a forecast “dollar” price of anything, especially gold. We really have no idea how much gold the US really has since there has been no audit since the 1950’s. We also have no idea how badly they will inflate money supply, although we we do know they have already gone ballistic. In other words, both the numerator and denominator are unknowns. I would suspect the end result will be how many “0’s” at the end of some number will be the case!
Why Is Gold Not Rising?
September 24, 2021
Many are asking why gold is not rising, as just about every other commodity makes new highs in the backdrop of inflationary tailwinds.
That’s a very fair question.
Some are even saying gold is dead, a silly and “barbarous” old relic of ancient times, ancient math and ancient common sense.
Needless to say, we beg to differ, not because we are Swiss-based gold bugs, but simply…well… let’s explain.
Current Price vs. Current and Future Roles
For those who see history and math as guides rather than “barbarous” and outdated disciplines, their convictions regarding gold’s role, and even price trajectory, do not wane or rise simply due to the paper price of gold.
To some extent, and despite Basel 3, gold remains openly manipulated by a handful of central and bullion banks who are terrified of gold’s shine for no other reason than it embarrasses currencies (and mad monetary experiments) falling deeper into discredit.
Silver. Not just triple digits price, but high triple digits.
No algos or calculus required. Just simple math.
CIGA Wolfgang Rech
What a shock that Kitco of all places would post such a bullish argument?
Silver Price To Hit “High Ranges” Of Triple Digits; Not Enough On Planet To Meet Demand – Neumeyer
September 24, 2021
(Kitco News) – Keith Neumeyer, CEO of First Majestic Silver, has previously called for the silver price to eventually hit triple digits. Now, he’s upgrading that forecast.
“We have two new driving forces which are electric cars and solar panels. These technologies, these businesses, really didn’t exist for the most part a decade ago. Today, I’m even more committed. I’m thinking triple-digit silver…I was always thinking in the low end of that triple digit. But now, I’m thinking it’s possible to get into the higher end of that range,” Neumeyer told Michell Makori, editor-in-chief of Kitco News at the Denver Gold Forum.
Monetary stimulus, along with the debasement of the U.S. dollar, should help gold, which in turn would provide tailwinds for silver, but Neumeyer noted that silver has a sound future regardless of monetary policy due to its demand and supply fundamentals.
Importantly, there simply isn’t enough silver production to meet long-term demand growth.
“As a mining industry, the miners produce about 800 million ounces of silver annually. You look at electric vehicles, the world will be consuming about 100 million ounces this year. You look at solar panels, another 100 million ounces. So, you have two industries that are consuming more than 10%, or close to 20%, of the world production. Above ground supplies are depleting at very fast rates. The deficit continues. Where is the silver coming from?” he said.
Neumeyer’s comments come as governments around the world, including the U.K., the state of New York, and California, have set deadlines on terminating sales of combustion engine vehicles.
“The automotive industry, worldwide, produces 19 million automobiles a year, of which, 5 million of those are electric cars,” he said. “So, if you’re going to replace every fuel combustion car on the planet, by, let’s call it 2030, 2035, call it 2040, how are you going to replace a billion cars at the rate of 5 million cars a year? Where’s all that silver coming from? Do the math. For every 5 million cars, you need 100 million ounces of silver, so it’s simple. There’s not enough silver on the planet to meet the demands of government,” he said.
Commodities at a low versus paper…in your lifetime! What’s in your wallet?
Transients is the name of the game.
The excuse du jour.
Always reactive. Never proactive.
Where does the government find these managers?
They couldn’t manage to wipe their asses because they never thought of stocking up on toilet paper.
They stimulate energy intensive manufacturing while restricting oil and gas exploration via the green movement.
But not to worry. Its only transient!
CIGA Wolfgang Rech
You of course are correct Wolfgang, but few will make this connection…
Column: Worldwide Energy Shortage Shows Up In Surging Coal, Gas And Oil Prices
September 24, 2021
LONDON, Sept 24 (Reuters) – Record gas and electricity prices in Europe, record coal prices in China, multiyear-high gas prices in the United States and oil prices well above their real long-term average are all manifestations of the same global energy shortage.
In the aftermath of the coronavirus recession, energy production has failed to keep up with rapid growth in consumption as energy producers struggle to raise output while demand has bounced back quickly.
The business cycle downturn and slump in energy prices caused by the pandemic, and before that the U.S./China trade conflict, depressed investment throughout the energy sector in 2019/2020.
Since then, the global economy has experienced an exceptionally rapid cyclical recovery, aided by low interest rates, bond buying and massive government spending, which has focused on energy-intensive merchandise rather than services, boosting energy consumption at extraordinary rates.
The result is a severe cyclical shortage of energy, evident in below-average inventories and surging prices for coal, gas and oil in all the major consuming regions of the world.