Gold hit $1,944 per troy ounce on Monday, beating its 2011 record of $1,921, while silver is also rallying, having reached $24.21 per ounce. While the precious metals keep gaining steam, the dollar index has plummeted to a two-year low against a basket of six major competitors, i.e. the euro, Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc.
Gold May Reach $4,800 by End of This Decade
"I think gold is in a very well-established boom-market, it is now hitting a new all-time high in a last remaining currency, which is the US dollar; so, before it made all-time highs in every other currency, like the euro, the British pound, the Swiss franc and so on", says Ronald-Peter Stoeferle, managing partner and fund manager at Incrementum AG, based in the Principality of Liechtenstein.
But that's only half the story, as the yellow metal is outperforming the stock market, the bond market, and mining stocks have confirmed the uptrend, according to Stoeferle.
This rally is unlikely to end anytime soon, the fund manager believes, predicting that gold's next target will be $2,300 per troy ounce and then $4,800 at the end of this decade.
"We really expect a golden decade ahead and I think that inflation or rather stagflation is a scenario that investors should prepare for", Stoeferle asserts.
Gold and silver are now both "in a secular bull market", and their prices will only keep making "new higher highs for years to come", admits David Gibson, managing director of GoldVu, insisting that no monetary stimulus will be able to reverse the ongoing trend. Quite the contrary, the government's monetary measures will only support gold's rise, according to him.
What are the Reasons Behind Gold & Silver's Rally?
The expert outlines a combination of factors that has strongly driven the demand for gold and silver.
First, since the COVID-19 lockdowns, major governments, both in the West and East, have embarked on a money printing spree to ensure that banks, corporations, small businesses, and individuals receive some financial relief for the economic impact of the closures.
"Following the creation of all that new money, government debt levels and central bank balance sheets have exploded higher", he explains.
To illustrate his point, the precious metals specialist notes that the US Federal Reserve has seen its balance sheet rise from $3.7 trillion in March 2020 to in excess of $7 trillion in July 2020. As a result, the US National Debt currently mounted to $26.5 trillion from $23.4 trillion at the end of February 2020.
Second, economies around the world have suffered substantial damage:
· many corporations, small businesses, and self-employed declaring bankruptcy;
· those who survived the perfect storm have had to substantially slim down their business plans;
· tens of millions lost their jobs or are temporarily laid off, with great uncertainty surrounding their future employment.
Third, the demand for both gold and silver surged at a time when many gold and silver mines had to close, as well as many major gold and silver refineries, causing serious disruption to the supply chain at the very time when demand was going through the roof.
"Money printing and poor economic outlooks traditionally cause investors to move into gold as it has a great historical track record of preserving purchasing power in the face of currency debasement", Gibson highlights.
Precious Metals are Antidotes to the Crumbling System
However, the reasons are not limited to economic shortfalls, it appears to be a systemic crisis, opines Claudio Grass, Mises Institute ambassador and an independent precious metals adviser based out of Switzerland.
He regards the coronavirus pandemic as a vehicle used by the political establishment in the West to push ahead with a "great reset" as proclaimed by the World Economic Forum (WEF).
"It is not Corona but politics that has set itself the goal of driving the old system to the ground and creating a new CO2-free, green utopia", Grass suggests.
He refers to "green" plans rolled out by left-leaning politicians and economists both in the US and EU which sees de-industrialisation and an irreversible shift to renewables.
"Those who buy gold and silver have understood this and are securing themselves against the inescapable crash of the existing global financial and monetary system based on the US dollar and the private economy", he presumes. "We know that central banks have manipulated and completely distorted the markets, but everything comes to an end - everything is operating in cycles".
Although short-term corrections in the price of gold and silver are possible, as always, the precious metals adviser admits that he is "super bullish for physical gold and silver", "especially when stored outside the banking system in a safe jurisdiction with a culture that protects private property, such as Switzerland and Liechtenstein".