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Forbes: This Could Be the ‘Perfect Storm’ That Pushes Gold to a New Record High

Article by Frank Holmes in Forbes

A “perfect storm” of surging government debt levels, plunging real bond yields, rising coronavirus cases and deteriorating economic forecasts pushed the price of gold to an eight-year high, and some analysts now project the metal to top its all-time high within the next 12 months.

What drove the yellow metal’s price action was not just an alarming rise in confirmed virus infections—U.S. cases hit a new single-day record of more than 42,255 on Friday—but also a weakening U.S. dollar. The greenback declined the most in three weeks as the yen and euro strengthened amid gains in global shares.

The real 10-year Treasury yield traded as low as negative 0.66 percent last Tuesday, a level we haven’t seen since May 2013. As I’ve shown a number of times before, gold trades inversely to bond yields, and when they turn negative, it’s like rocket fuel for the yellow metal.

Get this: As of right now, the Fed’s balance sheet stands at $7 trillion, or 33 percent of U.S. GDP. And earlier this month, the Treasury’s public debt soared past $26 trillion, an incredible 120 percent of the entire U.S. economy.

This isn’t sustainable, obviously, and some analysts now see dollar-denominated gold hitting a new all-time high in the next 12 months, even in a risk-on environment. Both Morgan Stanley and Citigroup maintain their call for $2,000 gold by mid-2021.

London-based research firm Edison goes even further. In a note dated June 23, analysts there commented that gold should be near $1,900, “with the potential for this to rise to in excess of $3,000.”

Gold’s Best Year Ever (So Far) in Dollar Terms

So far in 2020, physical gold is comfortably the best performing major asset. It’s outperformed not just the S&P 500, but also the U.S. dollar, Treasuries and high …

To read this article in Forbes in full click here.

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Although the information in this commentary has been obtained from sources believed to be reliable, The Gold IRA Company does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. The Gold IRA Company will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.