Last week gold surged above the $1,400-per-ounce level, closing the week at $1,430.00 per ounce.
Every now and then, a major shift occurs in the global economic system, such as when the United States moved off the gold standard under President Nixon in 1971. This event left world currencies to “float” against each other to determine their value. But now, with so many fiat currencies (currencies that aren’t backed by a commodity) in crisis, and with the world’s bad experience with the U.S. dollar in the 2001 credit crisis pushing investors to look for alternatives, gold is returning to center stage as the best value-holding asset.
International Man, a financial blog created by Doug Casey of Casey Research, predicts big things for gold: “An epic gold bull market is on the menu for 2019.” This prediction is based on a perceived convergence of a number of factors:
- “Basel III moves gold toward officially being money again.
- Central banks are buying record amounts of gold.
- Excessive U.S. sanctions have pushed countries to use gold.
- China’s ‘Golden Alternative’ allows for large-scale, oil-for-gold trades.
- The Fed’s dramatic reversal and the return of easy money bode well for gold’s strength against the dollar.
- The takeover frenzy in the gold mining industry is bullish for the price of gold.
- President Trump favors returning to the gold standard and is stacking the Fed with pro-gold people. …”
Any one of these factors is favorable for gold, says International Man, but taken together, they could indicate a very favorable environment for gold in 2019.
Rick Andrews is president of Avant Capital Management