The Forces to Propel Gold in 2021
The comments below are an edited and abridged synopsis of an article by Birch Gold Group
After a record year, gold could have an even better one ahead. After a more than 20% gain and a new all-time high, it could make a sudden surge over the next few months if the US election result is contested.
The plans of either administration are a blueprint for higher gold prices. Trump’s desire for a massive tax cut for the middle class or Biden’s loose monetary policies could translate to trillions of dollars of weight placed upon the Fed, which is poorly positioned to bear this expense.
Gold’s gains are likely to come from a combination of dollar woes, which will include a $27 trillion pile of sovereign debt (that could be closer to $155 trillion), a falling dollar and a low appetite for bonds. In the absence of willing debt holders, the Fed will likely continue printing money, debasing the currency further.
Gold is the only viable alternative to dollar debasement. Regardless of what materializes, there’s a $2,500 target for gold in 2021 with $2,700 as another possible high. Investors should commit to physical gold to avoid any downturns from the derivatives market.
Then there is the less-than-ideal state of the mining sector. Miners could fall on even harder times in the event that Biden’s presidential win holds.
Gold captured the financial sector’s interest as it rose to $2,000 earlier this year, considerably above its previous all-time high. It has lingered around the same level for months due to an environment of low to negative interest rates and broad economic uncertainty.
Although low interest rates began rolling gold upwards last summer, the climb came into prominence as central banks had to contend with some loose monetary policies to ease Covid19’s blow to their economies. The Fed’s ongoing multi-trillion-dollar stimulus has been among the more notable ones, and it has put the US economy on notice. Investors should buy the dip in both gold and silver moving forward.