There are many gold bugs out there who are salivating at the charts and calling for a massive run up in gold. Personally, I am expecting a major run up, but I am not placing my bets on the charts.

The charts are manipulated (like virtually everything else) by paper sales by major banks and headlines that algorithms read and act accordingly. Most of the time paper contracts are conjured up out of nowhere- with no real gold and sold into the “market” when the fewest buyers are around. By the way, it is always a “market order” to be sure the sells go through, the price goes down and the algorithms pick it up to induce even more selling and more pressure downward on the price.

The real reason that gold will, in my opinion, explode higher is that, at some point, this fraud will end. When it does the level of fraud will be revealed. I believe that most people will be stunned to learn just how fake ALL asset prices are. They will likely learn that stocks, bonds and real estate are GROSSLY overvalued, and this may cause generational losses.

On the other side of the coin, when assets being artificially repressed are unleashed the upside potential could be breathtaking and just might create generational wealth.

I have been watching the action in the real world and gold is up substantially in the last week based upon the supposed risk of Russia invading Ukraine. I saw gold rise $35.00 in one day based upon a THREAT with no action taken. Imagine what may happen when a real crisis strikes. I believe it is likely that the gold “market” could close limit-up for days where there are only buy orders and no sellers- the exact opposite of a market correction where there are only sellers and no buyers.

Anyone who is investing in passive (non-managed) funds should take this as a warning. On the way up all is well. On the way down- when everyone wants out and the ETFs you are buying are forced to sell just to WHOM are they selling to?

There are many other reasons why gold will perform well in my opinion. They are:

  • Negative real interest rates. The knock on gold is that it doesn’t pay interest. That is true. It is still FAR better than the negative-yielding debt that is around (that is in a currency that is losing value on top of it) and has held its purchasing power for over 5000 years.
  • Inflation. While most other commodities are skyrocketing, I believe that the only reason gold and silver have not participated is the manipulation. Inflation is 7% according to those who massage the numbers BUT, if reported as reported in the 1970s, would be a crushing 15%. In this case, if the Fed were to raise rates to 1%, we would still have an official negative rate of MINUS 6% and in the real world- what we feel in our lives would be MINUS 14%. How does no yield in an asset that is not bleeding value like the US dollar look now?
  • FEAR. The real fear, which most people are oblivious to, should be that all those people, corporations, cities, states, and nations that have promised to pay you back lack the ability to do so without a MAJOR (and I mean HISTORIC) devaluation of the currency they plan to repay you in. When the masses wake up to this, I believe they will see that with continued “printing and buying” the bills will likely get paid but with a currency that has only a fraction of the purchasing power you were expecting. If, on the other hand, the Fed stops the “printing and buying” it would likely cause a cascade of defaults that would lead people to gold because, as JP Morgan himself said “Gold is money- all else is debt”. In other words- you own it and are not counting on someone else’s promise to repay. In addition, the big money that would be led to this comparatively small market could unleash a price explosion. If you want to participate your time for action is likely getting short. The major banks and central banks have a massive head start.

While they are busy suppressing the gold price and buying record amounts for the last 4 years the “market” gives the appearance of volatility and keeps many away from the most likely asset to preserve your wealth going forward. By the way, there are only two (2) assets that central banks list as “riskless assets” on their balance sheets- US Treasuries and GOLD. Is it REALLY risky or is that just the illusion being portrayed by those cornering the market on it?

  • Geopolitical Tensions. Just this week we see tensions with Russia-Ukraine and China-Taiwan, etc. More importantly, to me, is what just happened in Canada where peaceful protesters are having assets confiscated by government decree with no evidence of wrongdoing- just having the wrong political view. If anyone thinks this is not a preview of what is coming globally you are likely not paying attention. The central bank digital currencies (mandated for all central banks by 2025 by the BIS) will make this ridiculously easy for any government anywhere to seize your assets if you step out of line. Do you have ANY preparations for that?

I don’t believe that gold is meant to be traded. I believe it is meant to be held to preserve the purchasing power of the “money” that you have worked all of your life to accumulate only to see a few unelected bureaucrats at the Fed and other central banks “print” the value of your money into oblivion. This is why prices are rising. It has NOTHING to do with any other bogus excuses they give to hide the truth.

Certainly, supply chain disruptions and other things exacerbate the problem but without the “printing and buying” people would have to produce real goods to survive- which more than half of our US population at this time- DOES NOT.

What is the value of a promise that can’t be kept? What is the value of an asset that is being valued in a currency that has little or no intrinsic value?

Be Prepared!

Any opinions are those of Mike Savage and not necessarily of those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information in this report does not purport to be a complete description of securities, markets or developments referred to in this material. The information has been obtained from sources deemed to be reliable but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.

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