Geopolitical strife almost always causes a gold price increase – so will recent events on the world’s stage push the precious metal beyond five figures? One expert thinks so.
Just a month ago, global financial insider Jim Rickards boldly proclaimed that gold may hit $10,000 an ounce in response to the possibility of a war with North Korea. Gold bottomed out on December 15th, 2016, and has slowly grinded higher since then – closing out the month of August 2017 at $1,338/ounce.
Rickards $10,000/ounce gold price forecast is something that may be on the horizon, and the current sense of hopelessness and bewilderment with the American system of government is a big driver. What could possibly drive gold to this unheard-of level?
- Banks are buying gold like crazy. Scotia Bank recently announced that it is buying gold and not selling any of it, all in response to the future value of the precious metal.
- Government policy changes: India recently invalidated its $500 and $1000 Rupee bills, exchanging them for digital currencies which have no intrinsic value.
- Relative purchasing power: It has been famously proclaimed that an ounce of gold in 1920 would buy a very nice men’s suit, while an ounce of gold in 2017 still does just that. Conversely, a men’s suit in 1920 cost about $20 – or the same as an ounce of gold at the time. $20 certainly wouldn’t buy a suit today.
- Gold can’t be frozen: Countries that are conducting “off-the-books” trade operations don’t currently use dollars or other digital/tangible currencies that can be frozen via the international banking system. Rather, they’re using precious metals, which are inherently valuable even after regime change, and that’s driving up the demand.
- There is a war on cash: According to Rickards, there is a modern war on cash occurring today. This refers to government-led (and often misguided) attempts to eliminate large denomination bills from circulation to somehow minimize illegal activities.
In the end, the real reason for this big war on cash isn’t much more than a thinly-veiled power grab by the government – many governments around the world. As minimizing cash and moving as much trade and commerce activities to electronic interactions as possible makes it much simpler and easier for the government to track what we’re doing and ensure they receive their share of the take.
According to Rickard, the GOP-held Senate has continually failed to move forward any bill or piece of legislation in their hopper, they’ve been viciously demonized by the opposition, and the “fake news” claims made by the White House have seriously eroded the public’s confidence and trust in established sources of information. This current political climate, combined with a global level of uncertainty that hasn’t been seen since the Cold War, is creating an environment where gold should appreciate in value quite quickly.
A gold price increase to $10,000 an ounce? That may or may not be feasible but one thing is certain – gold is a safe and reliable investment that outlasts war, elections, political problems, economic downturns and more. For more information about gold investing and how it can help you stabilize and diversify your portfolio, contact American Bullion today.
Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.