The Future For Gold Is So Bright I Gotta Wear Shades

Folks that have been watching and reading my reports, which I have been doing since 2005, are well aware that I don’t make predictions for gold much beyond a year or so in the future. When I recently reported that I think gold could see $20k within 10 years, many were surprised to see me make such a bold prediction. I certainly don’t make those kinds of speculations willy-nilly.

I’ve run the numbers and based it on the logic that I see. For example, the central bankers in the BRICS nations have done most of the heavy lifting to get gold up to record highs. But, they have only modestly backed their debt up with gold, in addition, their selling of US dollars to replace it with gold in their reserves is modest so far, and they have not started to do international trades in gold instead of the US dollar.

The future that I see is that not only will the central bankers in the BRICS nations more significantly back up their debt with gold, but, the central bankers in the G7 nations will be forced to do the same.

I also believe that gold will become the world reserve currency for worldwide central bankers, replacing the US dollar. This will lead to a switch to gold replacing the US dollar as the dominant currency for international trade. 

If these things happen, gold has to go much higher. If the rest of the world follows the lead of the BRICS nation, the combined buying of the central bankers worldwide will overwhelm the physical supply of gold. The BRICS nations alone are moving in the direction I am talking about and already have gold at record highs, as they get more aggressive and G7 nations join in, the supply of physical gold is much too weak for it not to go to levels that few believe is in the cards.

When I made my recent speculation that I see gold going to $20k in the next 10 years, I also mentioned milestones that we will need to see along the way. A key one is that pullbacks will be mild and over quickly, whereas rallies will be much stronger and last longer.

Price of gold milestones I will be watching for is first for us to see it reach $3000, which I think will happen this year, or at the latest in the first quarter of 2025. After that, the next big move to monitor is $5000 which I think we will see within two years. At that point, gold will be a top of mind topic for investors worldwide which I suspect will take us to $10k within 5 years. 

To get the rest of the way, we will be well into central bankers worldwide backing their debt up in a significant way with gold. Plus, gold will be a key asset in their reserves and being used in a substantial way for international trade.

I believe these trends are coming due to what has happened after the central bankers went off the Gold Standard. This allowed politicians to spend money like they have an unlimited credit card. After the US went off the Gold Standard, it was quickly followed by stagflation and then America went from the largest creditor into the largest debtor during President Reagan's terms in office.

Then in successive acts of fiscal incompetence, Democratic and Republican politicians continued to pile on the debt. It really got nuts after the 2008 GFC, when the Fed went into the Free Money Era. Politicians loved this because not only could they spend on their perceived unlimited credit card, they got to do it at near zero interest rates. Give politicians an unlimited credit card and free money and they will create a Death Spiral of Debt.

They weren’t the only ones to binge on debt, the rest of the world did the same thing. The Death Spiral of Debt is not an America only problem, it is a worldwide crisis.

If the Fed allowed the economy to run hot and inflation to be much higher than they are comfortable with, and the politicians slashed spending, it could make a big difference. But, the chances of that happening are slim to none and Slim has already left the building. The only realistic solution to this economic pendulum swinging too far to the debt side, is for the world to return to the Gold Standard.

Another factor of why I think my lofty gold prediction will be reached is the physical supply chain of gold. It is very weak. As a whole, the gold mining industry is around peak supply. Even though gold is at record highs, they aren’t able to increase production.

There are key long term structural issues affecting gold production. People are one of them, for much too long the industry has gone through rolling Lost Generations. Not enough people are replacing the previous generations over several decades.

A few decades ago, major gold mining companies slashed their exploration budgets and fired their exploration people. Due to the boom and bust periods in the price of gold, funding for exploration by juniors has been decimated. Gold mining requires constant exploration to replace what is mined each year. It just hasn’t happened.

We can see it in the number of developers that are moving projects through the economic evaluations and permitting then building new mines. The developer cupboard is bare.

During the 2001 to 2011 gold bull market, major mining companies took over the smaller players. So there aren’t enough junior miners and intermediate miners that want to aggressively grow.

Additional problems include miners needing to go to more challenging jurisdictions and remote places for lower grade deposits.

To make matters worse for the gold mining industry, it takes much longer than it ever has to permit new mines. 

While all this is happening, the cost to build mines and operate them has gone up dramatically in the past couple decades.

The result of all of these structural issues is why as gold is at record highs, gold production has peaked and will trend sideways and decrease. Even if the price of gold goes up dramatically.

The industry can’t manufacture new people to replace those retiring from the industry. Nor can it bring down costs in a big way. They can’t force politicians to speed up the pace of permitting. 

So while the world is going through the Death Spiral of Debt, and will need to return to the Gold Standard, the gold supply chain is weak and will take decades to repair. Like I said earlier, my speculation is not a willy-nilly thing. It is based on arguments that I believe are sound and will take the price of gold much higher.

I concede that I could be wrong about the world returning to the Gold Standard, and gold becoming more important as a reserve currency, and not be used in the way I think it will be for world trade. Even if I am only partially correct, I’m confident my bets will pay off handsomely.

Not only do I believe we are heading into a gold bull market like never seen before, I also think we are very early. For my American readers, I will use a baseball analogy, they just started singing the national anthem. For Canadians, if this is a hockey game, the boys haven’t even tied up their skates yet.

A good example of how early we are is the price of gold. While at nominal record highs, it still needs to go up around 20% to be at inflation adjusted highs.

Silver is another example, it is still only a little over half way from its nominal high. When gold is in a strong bull market, silver always comes along for the ride and outperforms.

I leave this report on a final example, the gold stocks. Early this year they were left for dead. Some have come off their 52-week lows, very few are trading above their 52-week highs.

In Closing

I wanted to make this report about where my thinking is regarding my extremely bullish outlook for gold.

Tomorrow, I will write about specific gold stocks to use as case studies into how early we are into a gold bull market.

All the best,

Allan Barry Laboucan

Disclosure

Rocks And Stocks News does not make buying or selling recommendations. The reports are for information purposes only. Sponsors pay a fee to Rocks And Stocks News for content creation. The business model of Rocks And Stocks News is to fund research and reporting on the sector, picks and sponsors through corporate sponsorship. We are thankful to sponsors for enabling commentary free of charge to readers and viewers of the reports. When reporting on sponsors it is on behalf of the sponsors discussed in the portion of the report mentioning the sponsor. Before making any investment decision it is important for you to speak with your financial advisors to consider your risk profile. It is also important to do your homework. To help in that process, Rocks And Stocks News means to be a gateway by doing reports and interviews of management of sponsors and picks. The reports and interviews should not be considered investment advice. Allan Barry Laboucan is the founder and owner of Rocks And Stocks News, he has worked in the mining sector since 1993 and has been reporting on the sector since 2005. He has worked with and been mentored by very talented geoscientists in geology, geochemistry and geophysics. He uses the skills he has picked up during his career to assess sponsors and picks in the reports. Whether a company is a pick or a sponsor they go through the same filter and are reported on when important news is made that Allan Barry Laboucan wants to discuss on the Rocks And Stocks News platform. He may own shares in sponsors and picks for investment purposes.