Gold’s bull market carries on strong

More good news for gold investors: the price of gold hit another all-time high here in the UK last week. I doubt that’s the last time I write those words. By the way you can access a complete gold profit plan – how, why and what to buy to profit from gold – by clicking here now.

And it has forced to me to shuffle what I wanted to write to you about this week. Markets have a funny way of doing that. Today I had planned to take a deep dive into some important developments in quantum computing. That’ll have to wait until tomorrow now.

Instead, I want to pick up on last Wednesday’s piece. I think it relates to why gold is soaring right now. And it also compelled lots of you to write in. I’ll share a handful of those notes in a second.

The overarching theme is this: Boris Johnson is the latest politician around the world to adopt a “spend first, ask questions later” approach. He’s already made several big and expensive promises and received very little in the way of criticism or questioning about them (like, “Hey Boris, how are we supposed to pay for all this?”).   

Like I said, he’s not the first. He’s part of a trend. In one way or another, the debate has shifted away from austerity and living within your means and towards spending, stimulus and other aggressive “pro-growth” approaches.

The problem is no one has any real idea how to pay for any of it. Donald Trump’s wall, the US democrats’ “Green New Deal”, Italy’s universal basic income, Japan rearming, the European Central Bank discussing buying stocks directly… it’s all cut from the same cloth. Ultimately it will be funded via debt or money printing – and its consequences will be felt in weaker currencies.

And so to the gold bull. As The Fleet Street Letter editor Charlie Morris says, gold is always in a bull market somewhere. Traditionally gold is measured in dollars. But that can hide things. Like the fact gold measured in pounds – which matters far more to you and me – is soaring. In fact, the number of countries gold is in a bull market in is growing. It’s the logical outcome of weakening currencies.

A good indicator of what we’re seeing. I spotted several pieces in the tabloids last week about high gold prices, all of which suggested people use the high prices to sell jewellery. My advice is the opposite. Hang on to it. This bull market has a lot longer to run. I think we’ll see gold at £2,000 per ounce (and the pound below parity with the dollar) before we’re done here.

By the way, bitcoin spiked again last week too. Why are gold and bitcoin rising in lockstep? I’ll come back to that one, but write to me with your view on nick@southbankresearch.com.

But now, into the mailbag:

Nick

I agree with almost everything you say, but:

The one good thing about Boris’ strategy is that it might just keep Jeremy out of no. 10 – at least he is not a Marxist, and he did pass a few exams. And he does seem to be stealing the Emperor’s clothes – another helpful strategy for winning an election. However, like all politicians, he will promise the earth, and then renege on his promises if and when he wins the election.

At least we live in interesting times – not least in Scotland, where I live!

I think this might well be a common view. There’s some sense to it. To me it seems strange that the only person seemingly capable of seeing off a dyed-in-the-wool socialist is Boris Johnson. It shouldn’t be that hard, given the fact socialism has been tried numerous times in various different places over the last century, and never resulted in more wealth or prosperity. Ever. It’s a failed idea that won’t die.

If Boris is the only person who can hold back the tide… well, that’s pretty scary, don’t you think? Bagsie top bunk in the gulag!

Spot on with your observations Nick, there is however a wider issue that no one seems to talk about.

How can we have a functioning democracy, even ignoring the ludicrous first past the post system, when there’s no party that stands for a sound monetary system. Any party that advocated a return to a gold standard would get my vote straight away, but I fear this will never happen with the clowns and charlatans in Westminster and the BOE.

How can the system ever change while state education perpetuates the Keynesian myth while wiping hard money history from the curriculum like the Romans wiped Carthage from history.

If Russia or China did this it would be ‘authoritarian propaganda’, here it’s the ‘liberal elites’ doing what’s best for the plebs.

Rant over, keep up the good work educating the vast minority!

I’m with you! Never mind a gold standard – how about someone with even a passing interest in slightly sounder money. That would be a start. Won’t happen.

And finally, this beauty.

Dear Nick,

In spite of having achieved “No Grade”, a score of less than 10%, in my Irish state Intermediate Certificate Latin exam in 1983, I thought I’d take up your suggestion of creating a mantra for Boris, and set it in a fitting crest.

Image

The gold colour represents his apparently boundless generosity with taxpayer funds, and the green his hope that this helps him beat Jeremy.

The chevron represents the authority of this un-elected PM to dispense those vote-buying funds, just because he wants to, and he can.

The tortoise is a symbol of invulnerability, or politically speaking, being teflon-shouldered. Leading with a head and neck that resembles an appendage of a different kind is merely a coincidence, as is the apparent absence of eyes and ears. The omission of a mouth is a misleading deception.

“Steal rather than borrow”, is disguised as “Furantur quam mutuari”. The bottom ribbon is reserved for the name, or rather how it might evolve over time as a combination of words more meaningful of the bearer.

How could there possibly be anything to fear from such an apparently honourable (they have a crest!), plodding, dependable organisation, in it for the long haul for the benefit of the ordinary people?

Dave

What a readership we have here. I’m a lucky man.

Until tomorrow,

Nick O’Connor
Publisher, Exponential Investor

Category: Commodities

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