GOLD long term positive scenario

2018年10月9日

This is my most positive idea on gold.
Sideways bottom of handle for 3-4 years, then breakout and rally to 25000.
Culprit would be escalating US yields leading to a severe challenge for the Treasury to pay the interest on the debt causing distrust in the US government ability to make due on its obligations.
The initial phase is already materializing, interest on debt rising 14% yoy and accelerating: treasurydirect.gov/govt/reports/ir/ir_expense.htm
Rising yield indicates it wont get better for FY2019.
Bond market scare would see people rush into gold as happened in the 70's.
At 25000 dollar per ounce, the US gold reserve would be worth 6.6 Trillion US$.
IF these reserves are actually there, sales would be able to stem the tide in both markets.

2018年11月1日

註釋

Some more thoughts...
According to usdebtclock.org/2012.html the debt stood at 921 Billion in 1980. That same year saw a multi-decade high in gold at 850 (short lived peak) in January and 711 (more sustained) in September.
The US gold reserves have been pretty much unchanged since and currently stand at 8133.5 Tonnes.
24hgold.com/english/contributor.aspx?article=4249489564G10020&contributor=Tim+Iacono

Therefore the US gold reserve was worth 222 and 186 Billion USD during these two gold peaks or 24.1 and 20.2% of the US Debt.

Currently the US debt stands at 21.7 Trillion dollars and has been rising with 1.15 Trillion per year on average the past 10 years.
24hgold.com/english/contributor.aspx?article=4249489564G10020&contributor=Tim+Iacono

Such a continued rise seems very likely to say the least in light of the increasing interest on debt costs that need to be made. This would result in a debt of 33 trillion in just 10 more years.
If the Gold reserve would need to be as big as a part of the US Debt in order to calm the bond markets that would necessitate a gold price between 25476 and 30456 USD.

This would mean the upper trend line would indeed be hit or slightly exceeded if this were the case.

2018年11月2日

註釋

More likely it seems that this time things will evolve a bit slower and that the peak will be hit after 2030.
In 2033 for example the gold price according to the graph could hit 36500 USD which would "allow" for a true debt explosion to 47 trillion.
The US will never default, they will keep rolling over the debt with more debt. It is the interest that will be paid on the debt that will make the world awash with dollars. And so will the gold market, more than any other.