November 2023 - Week 1 Edition

Gold Delivers Its Best October In 45 Years

Gold delivered its best October in 45 years, rising 7.3% this past month, despite rapidly rising interest rates, which so many pundits tell us is “bad for gold,” since it “offers no interest income.” They keep forgetting the strong performance of gold during historical high-interest rate periods like 1979-80 and the 2001-2011 surge. Gold is a crisis hedge as well as an inflation hedge, so it’s no surprise gold rose strongly after the October 7 Hamas attack on Israel, even though silver was flat and the platinum group metals were mixed.

Highlights from My Interview with Steve Forbes

We are in the process of editing my interview with former Republican Presidential candidate Steve Forbes and I hope to publish it next week, but I can tell you now that one of the “bombshell” revelations is that many of his inside political sources in both major political parties tell him that President Joe Biden could be forced out of running for re-election by his party leaders next year. He is just becoming too infirm and mentally unreliable in the execution of the duties of the highest office in our great nation. Steve added that Biden’s wife Jill could be a major roadblock; however. He compared the situation somewhat to 1919-20 after President Woodrow Wilson suffered a massive stroke and was laid up inside the White House with his wife Edith in effect running the country, along with a single cabinet member. Jill seems to not want to yield control.

No matter who runs next year, I know that the past four election years have turned out to be strong for gold, especially when Democrats are running for re-election with either high and rising deficits (Barak Obama in 2012) or with high inflation (Jimmy Carter in 1980). Biden is facing both!  Gold’s biggest bull market was in Carter’s term, 1977-80. In the final Carter year, gold tripled in price, from $240 in April 1979 to a peak of $850 in January 1980 and gold remained near $700 late in 1980, trading at $645 the day Ronald Reagan was elected, virtually tripling within 18 months. 

Gold’s longest sustained bull market was from 2001 to 2012, with its biggest move in Obama’s first term, peaking in the summer of 2011, when there was a U.S. debt ceiling debate, a credit downgrade of Treasury debt, a stock market crash and a massive gold rally in the summer of 2011. There was also a second gold surge in the election year, 2012, when the gold price rose from $1,531 per ounce on New Year’s Day to $1,691 on Election Day, 2012, another 10.5% rise.

The Aden Sisters Offer Six Reasons Why Gold is Set to Soar – Maybe Reaching Even $4,000 Per Ounce in This Cycle

At their opening speech last Wednesday night at a long-running financial conference (the 49^th Annual New Orleans Investment Conference), Pamela and Mary Anne Aden offered “Six Reasons Why Gold, Silver and Resources are Set to Soar.”  Here is a short summary of their six reasons, most of which involve a dramatic change in past trends:

(1) Interest rates have turned sharply upward after 40 years of gradual decline. Using the 30-year bond rate as their proxy, long-term rates peaked at around 15% in 1980 and 1981 then fell to 1% for a long stretch of time, since 2009, ending in 2021. Then, in short order, rates rose to over 5%. They said this is a “mega-change” of a 40-year trend, backed up by the Fed’s stated policy of keeping rates “higher for longer.”

(2) The U.S. dollar is beginning a “long road down” in terms of other currencies. The dollar has been in a 50-year decline to gold, but for the last year or so it has also declined in terms of other paper currencies. Going back 50 years, the dollar is down in terms of the Swiss franc and some remnants of the euro (like the German mark). The dollar traded at 4.3 Swiss francs in 1971, and now it is at par with the Swiss franc.

(3) Central bank gold buying is at a record high in 2023, after setting a new record high in 2022, and there is a reported huge amount of new central bank buying off the books in several nations. China is now the biggest producer of gold and the biggest buyer of central bank gold. It is also likely the biggest buyer of off-the-grid gold. Many nations, especially emerging economies, no longer trust the U.S. dollar long-term. The biggest buyers in the third quarter were China (78 tons), Poland (56 tons) and Turkey (39 tons).

(4) The current national debt crisis could explode with rising deficits, even during relative prosperity and no U.S.-involved wars. We have seen a 10-fold increase in our national deficit since 2001 and now we face rising interest on an out-of-control national debt.  (Interest on the debt now exceeds defense spending.)

(5) We now face unrest in more nations with the new war in Israel added to Ukraine while the threat of war with China targeting Taiwan looms. America can’t afford to fund proxy wars in two or three foreign lands at once.

(6) The technical trend in the Adens’ gold charts, as shown from 1967 to 2023, points to a massive upward move in gold, with the possibility of $4,000 gold at the peak of this cycle.

Many other speakers in New Orleans were also positive on gold and silver trends but the Adens’ talk was a strong opening to the annual edition of this premier gold-oriented conference, founded in 1974. Given the expected substantial rise in gold price, I strongly encourage you to call your account representative and add more gold to your current portfolio.

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