Tag Archives: Gold

Gold price will go up to $2,000: the Fed’s rate hikes, the currency war and the secular stagnation

The currency war, the market turmoil and the secular stagnation will make the gold price skyrocket to $2,000 in 2017 or 2018.

In Jan, 2016, we predicted the turnaround of the gold price, and since then gold has indeed rebounded from its three-year bear market as you see in the following chart of the gold price:

2016-3-3-gold-chart

The timing of our prediction was perfect. Investors finally realized three or four rate hikes in 2016 are practically impossible, and the secular stagnation will keep the US and global economy in need of financial easing. In addition to it, there are several facts for which we can be bullish about gold.

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2016 Gold price forecast: gold will be a boom when the Fed ceases rate hikes

After writing about the US economy and the oil price forecast, this is finally about the main issue: gold. The gold will be a boom in 2017, but the question is when to buy gold in 2016.

2015-12-26-gold-long-term-chart

After the mortgage loan crisis in 2008, as the Fed started quantitative easing, the gold price once reached $1,900 in 2011. However, as the Fed stopped the QE in 2014 and started raising interest rates in 2015, the gold price has been radically falling.

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The financial markets in 2016: the forecast for stocks, bonds, currencies and commodities

The easy market for investors supported by the Fed’s quantitative easing is already over, and now the question is merely when, not if, the asset bubble bursts in several markets. The assets in a bubble are stocks, bonds and the dollar.

The Fed has ended its QE programme and is now in a process of raising interest rates. Will the US stock market be okay? It can never be okay as the central bank has injected trillions of money and is now going to retrieve it, but the market is manifesting groundless optimism.

The greatest premise investors believe in is the strong US economy and thus the strong dollar. However, the time is near for the uptrend of the dollar to be fading out. Why, how, and when? We will explain it in this article.

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The commodity market crash leads to worldwide deflation: gold, crude oil, natural gas, copper and iron ore

The commodity markets are tumbling. Gold, oils and almost all the other commodities are immensely depreciated. It may be seemingly explained by the Fed’s rate hike and the slowdown of the Chinese economy, but the two following factors can’t be explained by them:

  • ┬áThe prices are radically falling even in the currencies with the quantitative easing, such as the yen and the euro.
  • The prices have fallen to the range before the US started the QE after the financial crisis in 2008.

Although the Fed has surely stopped the QE, they haven neither sold the purchased bonds nor raised the interest rate. If, in addition, the Bank of Japan and European Central Bank stopped the QE, the commodity prices could tumble further, so that what has happened after the massive QE is the deflation. It would be very unreasonable, and so investors need to conceive a reasonable explanation for it.

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When to buy gold in 2015/2016: Gold is a way to avoid the market crash in the near future

In early 2015, the gold price remained approximately $1150-1250, but as the Chinese economy slowed down, the price finally fell below $1100 in July.

As the Fed was going to rise the interest rate, the bear market itself was predicted by some investors. When the rate rises, the higher yield makes the dollar more attractive, and as a consequence, the gold price, traded in USD, decreases.

However, now we have another influential factor: the slowdown of the Chinese economy, which became more serious than before. So in this article, we contemplate on the two factors that affect the gold price and explain why gold is still a way to avoid the upcoming market crash in a few years.

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