The War on Cash Is Going to Send Gold to $5000 or Higher
The financial world is awash with claims that the gold bull market is over. For certain, the sell-off in the precious metal has been brutal, with gold taking out critical support.
However, worries about gold’s bull market are overblown. This is obvious, but you’d be amazed how many investors forget. It is not uncommon for gold to move 3% in a single day, and 5% weekly moves are not uncommon.
But the macro environment continues to favour gold. Currently central banks are withdrawing from additional monetary stimulus and have begun calling for governments to pick up the slack via fiscal stimulus.
Let the markets tank 10% or more, or the US enter a clear-cut recession, and the printing presses will be cranking once again. This time next year, there will be multiple new QE programs underway. We’ve already reached the point at which central banks spend $180 per month on QE. Next time it will be $250, or even more.
Finally, government policy favors gold. Governments have not abandoned their moves to try to outlaw cash by any means. Indeed, India just outlawed rupee bills above 500. Australia is now considering employing a similar policy for large bills.
This is just the start. In the coming months the Fed will be announcing similar plans for a cash ban in the US.