On Sunday evening, these pages warned about the following:
There is a risk that further mistakes could be made which will result in gold far surpassing my forecast, Goldman’s forecast, and worse anything rational during normal economic times.
It would appear as of Wednesday April 16th at 8 pm ET, those warnings were not irrational nor that far fetched.
This quick note is not to gloat, not yet at least, but to warn that there is something severely wrong with the financial plumbing as gold’s advance is not based on monetary nor price inflation. The moves are based on central banks increasing acquisition, now apparently at any cost, to create a hedge against a catastrophic event of unknown time, size, or origin.
First the shocking chart before speculating on what could be next.
Why such a steady almost relentless advance? Worst why since January have the central banks been accelerating not only purchases but demands for physical delivery of stored plus new purchases as soon as possible?
What do the global central banks know that the average Joe Six Pack does not?
This author’s opinion is that if the “trade war” goes south, the penalty by the world will be the imposition of a dollar crash to deliberately weaken the global reserve currency and force President Trump into concessions for his tariff policies.
While the US Dollar Index (not the broader Trade-Weighted Index) looks great to the administration in the low 90’s, a crash within less than a few months into the low 70’s would be an abject disaster. From his theory, a “cheap” dollar would result in a shift in the balance of payments.
The problem with this theory is that to create this type of environment for the US currency, and economic crash far worse than the Great Financial Crisis must occur. The consequences of such will result in massive bank failures, an acceleration of commodity prices resulting in higher embedded inflation, and gold easily soaring past these page’s forecast of a 2025 high of $3600ish.
President Trump romanticized on television the other day about the “peak” of American economic wealthy between 1870 to 1913. In some parts of that era, he is 100% correct, it was the boom times.
Unfortunately, another consequence of that era was the “Long Depression” a period from 1873 to 1896 where financial instability, currency instability (including fiat versions equivalent to this era’s crypto were attempted), and the much of the poorest 90% of the population living in abject squalor.
Let us hope that this author is wrong, but if one can afford to tuck a few ounces of gold or silver away for a rainy day, albeit much later than I have advised in the past, this is “that” moment in history to do so.
