Jim Rickards Predicts Gold Could Hit $10,000 an Ounce

Famed author believes the Fed could push the metal into a major rally

gold to hit $10,000

Gold’s price fluctuations have long been tied to the Federal Reserve’s actions – the perceived tone of Fed officials in public statements and meetings and expectations of rate hikes both tend to impact the price of gold, sometimes regardless of the Fed’s decision.

Expectations are high for a rate hike this month, and many even see a 100% chance of the Fed following through. Yet famed author and investor Jim Rickards is among those doubting the Fed’s ability to go through with the forecasted hike.

Talking to Kitco, Rickards pointed out the oft-overlooked factor of inflation goals. To Rickards, the Fed’s duty lies in job creation and price stability. With the former all but taken care of, the real issue becomes whether the central bank can meet its inflation targets year-on-year.

The article notes that, finding energy and food prices too volatile, the Fed tends to focus on Personal Consumption Expenditures, or PCE, in order to gauge whether inflation standards are being met. As Rickards points out, the PCE index continues to present a problem for the Fed due to its nine month-long decline, falling from 1.9% to 1.3% in that span.

Rickards says the threat of disinflation immobilizes the Federal Reserve and makes a December rate hike unlikely despite market expectations. Should the declining PCE stay at 1.3% or fall lower, there is no chance of a rate hike happening this month.

The article then recognizes Rickards’ opinion goes in line with the summary from the Fed’s latest policy meeting. In it, Fed officials noted that inflation might remain below the targeted 2% longer than expected, with some acknowledging that policy firming should be halted until inflation returns to the desired path. Some participants of the meeting also expressed concerns that following through with the planned rate hike before the end of the year could further subdue inflation expectations.

This discourse already helped gold come close to recapturing the $1,300 level, stopping just short at $1.295 an ounce. Rickards, however, believes that the motion around the $1,300 level is less important compared to what’s coming.

The author expects the Fed’s renegation of the December rate hike to have a massive impact on the markets, which will take a 180-degree turn. As a result, the dollar and bonds will fall while gold will rally further.

His long-term prediction is that gold will go as high as $10,000 an ounce.

While this level might sound exorbitant, Rickards stresses that the forecast is realistic as having such a price of gold is the only way to avoid deflation.

Advertisements

Why TD Securities Expects Gold Prices to Head Higher in 2018

 

Several analysts expect 2018 to be a bullish year for gold

gold headed higher in 2018

In spite of the possibility of successive rate hikes by the Fed, several analysts express in a recent TheStreet article that they expect 2018 to be a bullish year for gold. Among the primary reasons listed are the Fed’s potential reluctance to follow through with the planned rate hikes, geopolitical triggers, improved physical demand in key buying nations and investment demand as a hedge against stocks.

In the article, Bart Melek, head of commodity strategy at TD Securities Inc. (TDS), says he believes gold will benefit from a dovish Federal Reserve policy that will see a maximum of three rate hikes by the end of next year with real rates staying low. Aside from making gold a more attractive investment, lower rates also undercut the dollar, giving gold yet another boost. While there is a chance for multiple hikes next year, Melek sees a strong possibility for only a single hike by the end of 2018.

Expecting President Trump’s nominee for the next Fed leader to carry out a similarly dovish policy, Melek also listed the likelihood of a major correction in stocks and higher demand in India and China as further tailwinds for gold.

“I think 2018 is going to be a good year for gold, and it should shine bright in the New Year,” said Phil Flynn, senior analyst with Price Futures Group. More than merely acting as a hedge, Flynn explained in the article that the flimsy-footed run stocks have rendered gold “undervalued”, which could lead to purchases of the metal. Besides a potential price inflation coming from an improvement in overall commodities, Flynn also listed the launch of bitcoin futures as a boom for gold, stating that it will highlight the yellow metal’s role as an alternative currency.

Societe Generale’s metals analyst Robin Bhar thinks that gold could benefit if the planned U.S. tax cuts do not materialize, as this would make the Fed even more dovish. In the article, Bhar says conflict in the Middle East and terrorist threats around the world may continue to provide support, as will the likelihood that central banks remain net buyers of gold.

In terms of forecasts, the article shows that TDS sees gold reaching an average of $1,313 an ounce next year, with an average of $1,325 in the fourth quarter of 2018, compared to their expectation of $1,257 for 2017. Meanwhile, Flynn says gold will average $1,400 an ounce next year, with the potential to reach $1,500. Macquarie, a financial institution, agrees, stating in a recent report that gold will hit $1,400 for the first time in five years driven largely by a weakening dollar and political issues in the U.S.

Gold on Track to Go Higher says Rickards

Next breakout in gold could start in late November

gold 1350-1

How long before the next breakout in gold? According to Jim Rickards in a recent Marketslant article, the next upwards movement will start in late November or early December. While this seems to coincide with the expected December rate hike by the Federal Reserve, Rickards doesn’t think the Fed is in a position to hike rates even once.

Using data that shows disinflation over the past nine months and a weakening employment picture, Rickards argues that the only way the Fed can reach its targeted inflation rate of 2% is by delaying rate hikes indefinitely and weakening the dollar as a result. While a weaker dollar happens to be a major tailwind for gold prices, Rickards says this is only the start of gold’s strong fundamental picture.

Geopolitical risks from North Korea, Syria, the South China Sea and other parts of the world continue piling up. The most menacing of these is the conflict between the U.S. and North Korea, which Rickards believes will culminate in a U.S. attack on North Korean military bases by mid-2018.

The article states that quieter tensions are also supporting gold prices, as the deteriorating relationship between the U.S. and Russia will accelerate Russia’s efforts to diversify its reserves away from the dollar and into gold – unlike the greenback, gold is immune to asset freezes and seizures by the U.S.

Rickards writes that China, another top buyer of gold, might be looking to lead the world back to some form of gold standard by allowing oil exporters to convert the yuan they receive from China into gold on the Shanghai Gold Exchange. Closer to home, a major market correction might be in the works as markets realize that the Trump tax cuts will not materialize.

All of this is overlapped by what Rickards sees as a major supply squeeze going forward. He writes that gold refiners are already struggling to meet demand, and private bullion continues to move from bank vaults into nonbank ones, reducing the floating supply available for unallocated sales of the metal.

Rickards points to a flash crash in June that came on the back of an instantaneous sale of gold futures equal to 60 tons of physical gold, adding that the largest bullion banks in the world couldn’t source this much gold with months to do it.

To him, the yellow metal’s current levels mark a last stop before a move to $1,350 and then $1,400. However, that might only be the start of gold’s next upwards trend. The article features a chart compiled by gold analyst Eddie Van Der Walt that shows gold prices move across two trends, one lower and one higher.

This pattern has become more pronounced since 2015, and the chart shows that another breakout to the upside or the downside is imminent. With nearly all of the evidence charting an upwards move, gold prices could be on their way to $1,800 an ounce. Regardless of what high gold reaches in the near future, Rickards advises investors to have their bullion ready before the next breakout begins.

Gold Twin Maples Distributed Exclusively with Birch Gold Group

A successor that captures everything the Gold Maple Leaf has to offer with a modern touch.

gold twin maples canadian from birch gold group

First minted in 1979, the Canadian Gold Maple Leaf’s first issue covered a span of only three years. However, due to its immense popularity, the Canadian Parliament decided to continue its production through the Royal Canadian Mint (RCM), and the coin became a widespread token of value available in a variety of different sizes.

Given its reception, a successor that captures everything the Gold Maple Leaf has to offer while adding a modern touch was expected. Today, Birch Gold Group proudly announces that it has secured the rights to exclusive distribution of the next great coin from the RCM, the Gold Twin Maples.

Those familiar with the Canadian Gold Maple Leaf will find that the Gold Twin Maples coin has many of the traits that gave widespread recognition to the previous iteration. The physical perks of the coin provide an unprecedented amount of accessibility: weighing 1/4 ounces (7.7 grams) with a diameter of 20 mm (0.78 inches) and a face value of CAD $10, the coin can be held by investors big and small and makes a special addition to any collection. Its high gold purity of 99.99% will further ensure that the coin remains a sought-after commodity for years to come, and its compatibility with precious metals IRAs will provide immense versatility to anyone who acquires it.

As with several other coins produced by the Royal Canadian Mint, artist Celia Godkin was brought on to ensure a design that ages every bit as well as the coin’s value. Each of the Gold Twin Maples’ sides feature imagery that signals the highest status among precious metals coins: a portrait of Her Royal Highness Queen Elizabeth II on the obverse and a tribute to Canada’s unique sugar maple tree on the reverse. The addition of a micro-engraved twin maple leaf and precise radial lines during mintage give the coin unbeatable protection against counterfeiting while preserving its intricate design.

With how well the Gold Maple Leaf coin has been received by investors for several decades, and given the Gold Twin Maples’ flawless combination of assured value and unique design, Birch Gold Group has no doubt that the newest creation from the Royal Canadian Mint will prove to be everything that the predecessor was, and more.

Peter Reagan, financial market strategist with Birch Gold Group, is excited for the coin’s prospects. “It’s an honor for the Royal Canadian Mint to select us as the exclusive dealer for this beautiful coin. We believe that it will be extraordinarily popular among our customers and are excited to offer it to them.”

For more info on this striking coin, visit Birch Gold’s website at www.birchgold.com or call (800) 355-2116.

Gold Could Soon Hit Peak Output

 

Gold demand could be hard to meet in the future

geopolitical risk1-3

A large part of gold’s appeal lies in it being a finite resource and, as such, free from central bank manipulation. However, gold’s scarcity could soon become an issue – paving the way for record highs as miners find themselves unable to produce enough gold to meet global demand.

According to an article by the Economic Times, mining industry insiders and some market watchers have already voiced their concerns in regards to the available supply of gold. After price dips in recent years, miners were forced to cut back on production costs, which involved both reducing the number of active mining projects and severely limiting the exploration of new ore.

Now, with renewed interest in the yellow metal and with gold prices breaching key levels, supply could struggle to meet demand, leading to a further spike in prices. According to Danielle Bochove, author of the article, because mining projects take a long time to put into motion, miners won’t be able to adjust their production in accordance with market fluctuations. Randall Oliphant, chairman of the World Gold Council, is among those who believe that a supply glut will lead to significantly higher prices.

Talking at the 28th annual Denver Gold Forum, Oliphant said that gold could hit $1,400 an ounce in the next 12 months. He listed political risks in the U.S. as yet another driver behind heightened demand.

“It’s not clear how the whole U.S. political system will play out,” said Oliphant, via Economic Times. “All this uncertainty seems very fertile ground for people to get into gold.”

Production will fall even sooner as global political risks cause more people to turn to gold, with demand also supported by robust purchases from India and China, said the chairman.

The article notes that other attendees at the conference, which attracted 1,100 people this year, echoed Oliphant’s statements. David Harquail, chief executive officer of Franco-Nevada Corp., painted a concerning picture of the current state of the mining industry, saying that miners are merely using new projects to replace old assets as opposed to actual expansion.

Oliphant doesn’t see supply running out in the near future, but says it could happen sooner than people think writes Bochove. When newly-produced gold becomes scarce, a scenario Oliphant places in the medium term, gold will be in a prime position to pass its all-time high of $1,923 an ounce.

“We’re not going to fall off a cliff in the near term, but in the same time it’s really hard to see how we’re going to produce enough gold to meet all this demand,” he said.

Threat of War Could Send Gold Soaring

Money continues to pour into gold as tensions rise

threat of war good for gold

Last Sunday, North Korea launched its most powerful missile yet in an ongoing display of military strength. The launch of a supposedly advanced hydrogen bomb prompted a stern response from the U.S. military, and U.S. Defense Secretary Jim Mattis told the public that Trump was interested in all available military options.

Author James Rickards, who was the principal negotiator of the 1998 bailout of Long-Term Capital Management, sees this as a major risk. As stated in a recent Newsmax article, Rickards says the risk of nuclear war is higher than some realize: “People seem to have very short attention spans. I’m just looking down the road and you can see the war is coming.”

Rickards believes this will continue to provide a major leg up for gold, as the metal thrives in times of uncertainty and conflict – after recently breaking $1,350, Rickards says the metal could go up to $10,000 an ounce.

“The bigger picture, the one I’m looking at, is that gold hit an interim low on Dec. 15 and it has been grinding higher ever since. It’s one of the best performing assets of 2017,” he explained.

Money continues to pour into gold as tensions become harder to ignore, although many believe there’s room for a lot more buying. Tom Kendall, head of precious metals strategy at ICBC Standard Bank, sees the metal going past its current highs: “We’ve got the geopolitics and we’ve also got a fairly benign interest rate environment. There’s still nothing threatening coming out of the Fed recently.”

The article states that war isn’t the only risk coming from Trump’s White House, as the President is expected to push for harder sanctions on Chinese banks that continue to collude with North Korea. While retaliation from these banks in the form of dollar devaluation would be a major issue, it’s actually something that Trump has long been calling for, believing that an overvalued dollar continues to hurt U.S. trade.

Because of this, as Newsmax editor Andrew Packer explains, Trump isn’t likely to back down from sanctions on large Chinese banks due to the possibility of a foreign reserve sell-off, which would significantly benefit gold.

“When you consider both the likelihood of more downward pressure on the U.S. dollar resulting from the North Korean, Chinese, and U.S. political concerns, and the Federal Reserve’s sluggish action on raising interest rates, the upside for gold looks very likely,” said Packer.

“I’m expecting gold to rally and challenge the $1,500 resistance level sometime in 2018. And I wouldn’t be shocked by a run that brings it to $1,750 by the end of next year.”

Own Gold in Age of Cyber-Terrorism

This could be the biggest threat to the economy

cyber threat-2

With the exchanges between President Trump and North Korea’s Kim Jong-Un, there has been increasing concerns of escalation, nuclear or otherwise, between the two nations.

Marc Faber, however, believes that the next great battle might be fought on a more subtle battlefield. As seen in Olivier Garret and Shannara Johnson’s piece on Forbes, the publisher of the “Gloom, Boom & Doom Report” finds an attack on the U.S. unlikely and points to cyber-terrorism as the real threat that everyone should look out for.

There’s no question that cyber attacks are becoming more sophisticated, and with the increased connectivity of the 21st century, such an attack could have devastating consequences. Faber gives the example of a major U.S. city such as New York having its electricity or Internet switched off. In such an event, the only assets that would hold value would be physical ones that are recognized as a medium of exchange.

Even bitcoin, the cryptocurrency valued for its security, would be rendered close to meaningless. Gold bullion, however, would not only keep its price but likely see a significant increase.

The threat of a cyber-attack isn’t the only thing making Faber hold onto his bullion. The publisher is known for his contrarian investing style, yet many don’t realize that his backstory provided hard lessons on the value of assets.

Growing up in post-WW2 Switzerland, Faber came to distrust paper money early on while learning to appreciate the safety net that precious metals provide. Talking to the Hard Assets Alliance, Faber recalls how a million dollars was once an almost exorbitant sum, yet today is something that is increasingly reachable.

Unlike some, Faber understands that inflation is real and sees no better example of it than the loss of the dollar’s purchasing power. The Fed continues to ignore gold while applying loose monetary policies that only benefit the wealthiest 0.01% – those with the largest number of real assets.

“50% of American people have no assets. … They don’t benefit from money printing. Actually, they’re hurt because their cost of living is going up, and it’s going up more than the CPI would indicate,” Faber explains.

Faber believes that investing in an asset outside of the monetary system is the only way to both shield yourself against a cyber-attack and protect your wealth against the constant erosion of currencies. To him, gold bullion remains the best possible asset to own that’s independent from banks, including central banks. It promises to keep its value against any threat, both virtual and physical.