Central banks are buying record amounts of gold… It’s the start of an epic bull run for the monetary metal… In the mailbag: “I wouldn’t trust Facebook if it told me water flows downhill”…
Take a look for yourself…
Last year, central banks – led by Russia and China – bought (net) 651 metric tons of the stuff.
That’s a jump of 75% over 2017.
And it’s the most buying by central banks since 1971 – the year President Nixon yanked the world’s money system off the gold standard.
In today’s dispatch, we’ll show you why this surge in central bank buying is part of a wider movement away from the dollar-based international monetary system.
And we’ll show you why it will kick off a mania in gold that could take prices up 2,000% from here.
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In the August 27 dispatch, I told you gold was the perfect contrarian buy.
And on August 28, I showed you how industry insiders were loading up on gold mining projects in anticipation of a gold bull run.
Since then, gold is up 10% in dollar terms.
That’s according to colleague Nick Giambruno.
As regular readers know, Nick heads up our Casey Report and Crisis Investing advisories. And it pays to listen to his big-picture market calls…
For instance, when Cyprus was in crisis in 2012, Nick made seven recommendations to his subscribers. The Cyprus Stock Exchange had plunged 98% from its peak. And most folks thought it was crazy to invest in Cyprus at the time.
But Nick’s recommendations went as high as 61%… 97%… 171%… and even 214%. The one loser of the bunch went down just 8%.
More recently, Nick was one of the first on our team to spot the massive opportunity in the legal cannabis industry. His biggest cannabis winner is up 481% since he added it to the Crisis Investing model portfolio in August 2017.
And now, one of the biggest opportunities on Nick’s radar is gold.
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Nick calls it the “re-monetization” of gold.
You see, we’ve been living in the fiat-money era ever since Nixon took the dollar off gold. But Nick says gold is now returning to its rightful place as money…
For more than 50 years, the government and mainstream economists have tried to minimize the importance of gold in favor of their inferior paper currencies. But that’s all about to change – and soon.
We’re on the cusp of a new monetary era. For the first time in more than half a century, gold is in the process of returning to its rightful place at the center of the international monetary system.
As currency expert Jim Rickards has been reminding folks, the global monetary regime has collapsed three times over the past 100 years.
First, in 1914, when the world went off the gold standard to fund World War I. Second, in 1939 when it went off gold again to fund World War II. And third, in 1971, when Nixon ended the direct convertibility of dollars to gold.
On average, these shifts seem to happen about every 30 to 40 years. It’s now been over 40 years since the last collapse. So another paradigm shift is due.
Here’s Nick on what that means for gold investors…
The last time the system experienced a paradigm shift of this magnitude was in 1971. Following that shift, the dollar price shot from $35 per ounce to a high of $850 in 1980. That’s a gain of more than 2,300%. And I expect we’ll see something on that scale again.
That’s a bold call. And it’s not just based on the newly discovered appetite for gold from central bankers around the world.
This one has flown under the radar of most mainstream news outlets.
But in 2017, when tensions with North Korea were rising, President Trump’s Treasury Secretary, Steve Mnuchin, threatened to kick China off the U.S. dollar system if it didn’t crack down on North Korea.
And it freaked out China… big time.
Without access to dollars, it would struggle to import oil and engage in international trade. Its economy would come to a grinding halt.
China would rather not leave itself exposed to this kind of pressure. So it created an alternative that means it’s no longer dependent on dollars.
Here’s Nick with more…
Last year, the Shanghai International Energy Exchange launched a crude oil futures contract in Chinese yuan. For the first time in the postwar era, it will allow for large oil transactions outside of the U.S. dollar.
Of course, most oil producers don’t want a large reserve of yuan. China knows this. So it’s explicitly linked the contract with the ability to convert yuan into physical gold. This will allow oil producers to sell oil for gold… and completely bypass any restrictions, regulations, or sanctions of the U.S. financial system.
And the more countries Washington puts on its naughty list… the more support there’ll be for China’s oil-for-gold system and others like it.
President Trump’s recent economic sanctions on Iran are a case in point. As Legacy Research cofounder Doug Casey explained it in the May 24 Casey Daily Dispatch…
It amazes me that Trump has not just precluded Americans from trading with Iran. He’s also given orders to the Russians, Chinese and everybody else in the world, telling them they’re not allowed to buy Iranian oil.
They aren’t going to abide by that. One consequence is that it will speed up the inevitable dethroning of the U.S. dollar. Nobody wants to use it; they understand the dollar is the unsecured liability of a bankrupt government. And they don’t like the fact their payments all have to clear through New York. There will soon be an alternative to the SWIFT system, probably using gold.
That means a lot more demand for gold… and higher prices as a result.
But in tomorrow’s dispatch, we’ll show you another trend that’s fueling the new gold mania.
As you’ll see, it has to do with cryptocurrencies… and the monetary revolution they’re unleashing.
Stay tuned…
The conversation turns back to cryptocurrencies, after we passed along world-renowned crypto expert Teeka Tiwari’s guidance last week.
But first, one of your fellow readers is suspicious of Facebook – which we’ve told you before is a for-profit surveillance company…
I wouldn’t trust Facebook if it told me water flows downhill, and I therefore have nothing to do with the company.
Further, I refuse to have anything to do with smartphones despite the many significant and obvious benefits, because I trust neither the companies behind them nor the government to not misuse the powers that my use of a smartphone would give them.
I refuse to carry a rat with me wherever I go!
– Al R.
Back to cryptos…
The arguments against blockchain and crypto always forget (conveniently) the decentralized advantages. It also completely dismisses the unbanked, and there are more people without banking than with banking. Here we are talking billions of people that cannot even if they wanted to open a bank account nor verify identity.
The banking system only serves the first world and could not care less about the billions of people in third-world countries. This is where blockchain and crypto and decentralization is in a league of its own. It upsets the caveat emptor and disempowers them.
– Anthony H.
Thank you, Teeka, for holding our hands, as you say. It has made all the difference. At one point, my crypto portfolio far surpassed [in dollar amount] the stock portfolio I have contributed to for 40 years.
Even as it settled to a much lower number, your calm presence has helped me become a better investor.
– Billy T.
Aside from volatility, the big risk of cryptocurrency is that it competes with fiat currency, which is controlled and manipulated by governments – the guys with the guns. That’s why I have more confidence in other blockchain applications.
– Richard B.
Do you believe cryptos can replace fiat currencies… Or do you agree with Richard B. that there are better uses for blockchain technology? Write us at feedback@legacyresearch.com.
Regards,
Chris Lowe
June 3, 2019
Barcelona, Spain