The case for gold in 2024
Excerpt from Grant Williams’ Podcast with Luke Gromen

March 2024: The gold price measured in USD just set a new all time record high closing price
A long-overdue episode seven of Shifts Happen sees Luke Gromen return to discuss the pace at which three things are happening: the acceleration of the US fiscal crisis and debt spiral, the Fed’s policy mistake of not letting inflation run hot enough, and the de-dollarization of global oil markets.
Luke explains that China needs to de-dollarize its oil imports and commodity imports to avoid a currency crisis, which is driving the de-dollarization of global oil markets and also highlights the importance of gold in this process, as China needs gold to work in order to improve its standards of living and avoid a crisis.
A US fiscal crisis could trigger a massive rise for gold
Luke believes gold will continue to rise in price, and that the pace of events is accelerating towards a US fiscal crisis. He explains the US is facing a fiscal crisis due to its high debt and deficits, and the lack of price-sensitive buyers for its treasuries and that the Fed’s choice is not inflation or deflation, but rather how it wants to lose the long end of the yield curve. You can listen to the full episode for free here.
If deficits are this bad in boom times, try imagining a bust
Over the last ten years, the US government debt has increased from 17 trillion to 34 trillion, but central bank holdings of treasuries has not increased at all.
Central banks over the world have diversified to gold, euros and other assets. The US is currently running record deficits but with no one except themselves buying the issuance of treasuries required to fund the deficits. And that’s in peace and prosperity times. Just imagine what happens in a recession!
Once you have to fund your deficits with more debt, it’s game over and the beginning of a new era. It can take years, or even decades, but the proverbial can can only be kicked so far down the road before the new paradigm is upon us.
“Gold grinding higher in 2024″
Well, if grinding means +25-40%
The gold price has been surprisingly resilient in 2023 despite higher interest rates. Many are still skeptical toward the yellow pet rock as an investment. And Bitcoin has rightfully caught some of the spotlight. However, Gromen’s analysis of China’s need for a gold/oil/goods de-dollarization, and beginnings of a US debt crisis point to gold grinding ever higher. Gromen talks about a 25-40% upside for the rest of 2024, to $2500-2800 USD/oz!
This is no recommendation to buy or sell assets, but I personally typically keep around 10% of my assets in gold. I’ll rebalance to 10% once gold gets to 20% of my portfolio (if other assets fall or gold quickly appreciates vs. my other investments).
P.S:
Since writing this article Gold is currently up from 2080 to 2400+ (as of May 21, 2024). Gold is looking very good for the next few years.
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