December 2020 - Week 3 Edition
Our 2020 Gold and Silver Price Projections Were Too Conservative! How About 2021 – Could We Be “Too Conservative” Again?
Our 2020 predictions for gold and silver turned out to be conservative. Way back in July 2019, when silver was barely $15, we “boldly” predicted $18 silver by year’s end and $20 silver in 2020. Well, we reached $18 silver in three months and $20 silver by July 2020. Then silver rose to $29 in August 2020!
As for gold, we predicted last January (in the Week 3 edition) that gold would reach $1,800 to $2,000 in 2020, but we were too cautious there, too. We predicted that gold would peak at $1,800 if Donald Trump won re-election, but we said the only chance gold would reach $2,000 was if a socialist Democrat like Bernie Sanders or Elizabeth Warren won in November. As it turned out, gold peaked at $2,070 in August, when the election was still 11 weeks away and the “moderate” Joe Biden was the Democratic candidate.
Last January, of course, we had no way of forecasting that the COVID-19 pandemic would supercharge deficit spending. We based our prediction on the ongoing impeachment process that month, as well as past election year trends, plus rising global tensions. In hindsight, the printing of way too many trillions of new dollars in response to the COVID panic was the primary engine that pushed gold prices above $2,000.
Just as a reminder, our 2021 predictions are for $2,350 Gold and $32 Silver. Could we be too conservative again? That is quite possible. There is no way Congress and the new Biden administration will lower deficit spending in 2021. Nor will COVID magically disappear with a vaccine that doesn’t really cure the disease. Nor will the many geopolitical threats suddenly solve themselves.
Now is not the time to sell any of your precious metals or rare coins you have stockpiled over the years. We need to hold all of our hard assets and buy more for times just like these, when metals will become more valuable as most major currencies “race to the bottom” in value. All major global central banks are offering zero or near-zero returns on cash and are massively infusing their balance sheets with new paper money. This is not the time to sell, it is for times like these that we accumulated “real” monetary assets. Call an account representative today!
Gold recovered to $1,840 late Monday, December 14, after correcting late last week following a series of anemic inflation reports and delays in the Congressional relief packages. The Consumer Price Index and Producer Price Index were each up only slightly, leading investors to think that the trillions in newly printed deficit dollars won’t fuel inflation, but that is only due to recent economic lockdowns and COVID fears. Once the economy opens up, we are likely to see sharply rising inflation.
Bitcoin is Back with a Vengeance, Calling Gold “Worthless”
With so much money sloshing around, courtesy of the Federal Reserve, prices are being bid up in stocks, real estate and even Bitcoin. With Bitcoin trading near its highs from several years ago, the marketers for this new “phantom money” are out in force on the financial news channels trying to sell investors on a $19,000 “coin” that really isn’t a coin but a line of computer code somewhere in the “cloud” up there.
There are now commercials running on CNBC that glorify Bitcoin as the “new gold.” They describe how gold is now “worthless” because investors can’t use it for anything. They say we can’t walk into a store and spend a silver or gold coin on anything, but Bitcoins can be transferred phone to phone for purchases. This is true, if your main purpose for holding a coin is to spend it – rather than to save it as an investment.
How could anyone call gold worthless when it is the only store of value that has held its value for many centuries – or millennia, in fact – and Bitcoin is only about 11 years old? The first gold jewelry in the world has now been discovered in Bulgaria, at Varna Necropolis, an ancient cemetery, c. 4200-4600 BC.
Here’s what I would say to Bitcoin fanatics: There are hundreds of cryptocurrencies and yet Bitcoin is the only one whose price is rising substantially. To me, that seems like a bubble. Why aren’t the others rising, too? Here’s something else to think about. Do you think the governments of this world want millions of their citizens to have a private, tax-free currency competing with their fiat paper currency? Do you think they will let Bitcoin go unregulated and untaxed forever? They could close Bitcoin down at any time; and the lack of any government supervision or regulation also makes Bitcoin subject to manipulation.
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