GOLD $3,000... AND BEYOND
deposits. Thousands of these small companies trade on Canadian exchanges – which don’t share the same level of scrutiny as U.S. exchanges. Most of them trade for pennies and will never come close to opening a mine. The sector is full of speculators and scams. So be cautious. Don’t get me wrong... If you do know what you’re doing in the gold sector, these stocks can absolutely soar if you pick the right one. But for me, I need to meet personally with management and ideally visit the projects before I’m comfortable recommending them. So where does gold go from here? THE FED IS PUSHING GOLD HIGHER As a personal rule, I rarely make bold predictions on a price target for gold. But I am confident that the price of gold will reach $3,000 over the next 12 to 18 months. Here’s why... When we look at gold prices across history, we typically use the “nominal” price. That’s simply the number of U.S. dollars it would take to purchase an ounce of gold at that specific point in time. But we also know that the purchasing power of the dollar has been inflated away over time. A dollar today doesn’t purchase what a dollar could buy decades ago. Meanwhile, the purchasing power of gold has remained relatively constant. For example, throughout the last several hundred years, the price of a custom-tailored men’s suit could be
Despite the Fed’s unprecedented amount of monetary debasement, inflation has mostly been kept in check. Last month, however, Jerome Powell announced the Fed would no longer lift rates to prevent inflation. In other words, the Fed wants inflation. My bet is that we’ll get it. Good and hard. And you’ll be glad you own gold. predictions on a price target for gold. But I am confident that the price of gold will reach $3,000 over the next 12 to 18 months. purchased for about an ounce of gold. That’s why I prefer to look at gold by using the real price. That means using inflation- adjusted dollars (today’s dollars) to value gold through history. So for example, in 1980 the nominal price of gold was $800 per ounce. But in today’s inflation-adjusted dollars, the price would be $2,800 per ounce. That means that gold still hasn’t hit its all-time high in real terms. It still needs to rise more than 40%. And it’s going to... As a personal rule, I rarely make bold
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September 2020
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