07.11.2023 – The price of gold is heading for new records. Gold bugs point to the increased geopolitical risks. And then there is the American over-indebtedness.
As you can see, the daily chart has risen since the Islamofascists attacked Israel. This is exactly what we had predicted. Gold briefly broke through 2,000 and the all-time high of 2,081 is within reach despite the recent setback. Much will depend on whether the situation escalates or whether the conflict remains confined to Gaza.
Source: Bernstein Bank GmbH
One of those who believe in a new high is Tom Palmer. This is not surprising, as he is the CEO of Newmont Gold, one of the world’s largest gold producers. In an interview with the Financial Times, Palmer described the war in Gaza as an important catalyst for a new bull market. Ole Hansen from Saxo Bank said that a break of the 2,000 mark “can push gold beyond the prior record highs it saw around $2,050 in May this year, and March 2022.”
If gold manages to break out, that would indeed be interesting – after all, we are in a high-interest rate environment. The yellow metal has gained as a safe haven and at the same time defied the lack of buying mood among index funds, as the financial blog “ZeroHedge” reported.
Gold in the supermarket
On the one hand, small investors in particular stocked up: Just over a month ago, the wholesale giant Costco made headlines – like Metro, the company only sells to traders. The US group had started to offer gold in its supermarkets. In an analyst call, CFO Richard Galanti said that the bars had been snapped up from the shelves. He told CNBC: “I’ve gotten a couple of calls that people have seen online that we’ve been selling 1 ounce gold bars. Yes, but when we load them on the site, they’re typically gone within a few hours, and we limit two per member.”
Farewell to the dollar
Due to global politics, the fear of a financial collapse in the USA is creating a buying mood. Simon Black from the blog “SovereignMan” has just drawn a parallel with the 1970s: The US had to pull out of Vietnam; Watergate scandal; hostage crisis in Iran; two oil shocks; economic chaos and soaring inflation. And in the middle of this era – which reminded him strikingly of the country’s current weakness under an incompetent president – an epoch-making law was passed on November 14, 1974. It didn’t even have a name and was introduced by US Senator James Fulbright – it overturned Theodore Roosevelt’s executive order banning gold, which had been in place since 1933. After that, the price of gold took off: to 180 dollars in 1975, to 850 dollars in January 1980.
And now: Due to the gigantic debt of the USA of 33.7 trillion dollars, the 2,000 mark is only the next stop. Chaos is looming and by 2031 the USA will be spending 100 percent of its tax revenue on servicing its debt and social spending.
The masters of money are stocking up
Apparently, the world’s central banks are also assuming that paper money will be gutted. In any case, the world’s central banks bought 337 tons of gold in the third quarter – the third-highest figure ever recorded, as the lobby group World Gold Council recently announced. In the first three quarters, demand from central banks was 14 per cent higher than in the previous year; the 800 tons ordered to date is the highest figure ever recorded for a nine-month period.
China in particular has stocked up. Beijing increased its stocks for the twelfth time in a row in October: Stockpiles filled up by a further 23 tons to 2,215 tons. Just like Poland or Singapore, the People’s Republic is diversifying its reserves.
We are therefore curious to see whether we will experience a new golden bull run – Bernstein Bank wishes you successful trades and investments!
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