Gold Standard Coming Back
The Case for $8,890 Gold
My friend and colleague Christian DeHaemer recently revealed to readers a historic event that is set to take effect on January 1, 2013.
In short, major banks around the world will be forced to designate any gold they hold as a First Tier (or Tier 1) asset.
In other words, the world will be going back to a gold standard of sorts. Gold is set to become money again.
Read that again, dear reader: Gold is set to become money... just like cash.
Three cheers to the gold bugs!
Chris broke the story in Wealth Daily back on June 6 — but the mainstream media is just starting to pick up on this historic event...
Last Thursday, Forbes ran a story titled, “Signs of the Gold Standard are Emerging from Germany."
Forbes quoted a report by Deutsche Bank (Germany’s largest bank) published a week earlier:
[G]old is not really a commodity at all. While it is included in the commodities basket it is in fact a medium of exchange and one that is officially recognised (if not publicly used as such). We see gold as an officially recognised form of money for one primary reason: it is widely held by most of the world’s larger central banks as a component of reserves. We would go further however, and argue that gold could be characterised as ‘‘good’’ money as opposed to ‘bad’ money which would be represented by many of today’s fiat currencies.
The conclusion from our overview of gold functionality is that the key difference between good and bad money is scarcity (imposed supply discipline could be another way of describing this). Fiat currencies can be scarce but this scarcity may change on a whim which may both impact its tenure as currency and/or relegate it to being characterised as bad money. Gold is truly scarce, having a concentration of around 3 parts per billion in the Earth’s crust.
The intellectual rhetoric is matching action by central and public banks.
It’s also coming from private residents, the retail sector. In fact, they’ve been on a gold-buying binge...
According to an August report from the World Gold Council:
The ongoing sovereign debt crisis in the Eurozone underpinned European investors’ enduring conviction in gold’s capital preservation properties. Demand for bars and coins from retail investors posted a 15% year-on-year increase to 77.6t; 19% higher than the five-year quarterly average of 65.2t.
Official sector demand in the quarter reached a record high of 157.5t, more than double the level of Q2 2011 and accounting for 16% of overall global demand. Central banks that bolstered their holdings during the period included the National Bank of Kazakhstan, and the central banks of the Philippines, Russia, and Ukraine.
So, what does all of this mean?
It means the moneyed class is increasingly parking its investment capital in gold and other precious metals.
We told you how George Soros, Vladimir Putin, and John Paulson are tripping over themselves to buy gold. They know demand of gold is set to increase with its designation as a First Tier asset — and they know today's prices are likely to look cheap two to three years from now...
As the Deutsche Bank report said, "Gold is truly scarce."
We could witness the investment phenomenon of too many dollars chasing too few assets as the masses follow the smart money into precious metals.
The mathematical result is almost guaranteed: Gold has to increase in price dramatically to reflect its true value.
My friends, it's now time to invest in gold again.
In fact over the next two years, gold could be sitting safely at $8,890 an ounce.
Now, before you tell me I've gone bonkers, $8,890 may well end up being a conservative estimate when you adjust for inflation.
Hear me out...
When the gold standard window was closed in August 1971 by President Nixon, the yellow metal had already risen from its fixed price of $35 an ounce to $42 an ounce.
Nine years later, in 1980, gold peaked in price: It had soared to $850 an ounce, rewarding early investors with a 2,400% return.
Had I made such forecast in 1971, would you have believed me?
Well, mark my words today: We will see gold's price setting record highs in just a few months.
If $8,890/ounce is a tough pill to swallow, consider the prediction of Mike Maloney, a precious metals investor and revered historian on monetary history and economics...
Mike has run calculations showing that if history repeats itself — and gold covers the same portion of the currency supply that it did in 1934 and 1980 — we should see prices of at least $15,000 per ounce within the next three to five years.
Other insiders are predicting around the same price point: between $10,000 and $15,000.
Chris DeHaemer has put together an exclusive report on this historic event.
He’ll tell you who’s behind our return to the gold standard — and why; what could happen to gold prices; and three ways to play this once-and-a-lifetime opportunity for profits.
Chris will be releasing his report in a couple of weeks. Stay tuned...
Brian is a founding member and President of Angel Publishing and investment director for the income and dividend newsletter The Wealth Advisory. He writes about general investment strategies for Wealth Daily and Energy & Capital. Known as the "original bull on America," Brian is also the author of the 2008 book, Profit from the Peak: The End of Oil and the Greatest Investment Event of the Century. In addition to writing about the economy, investments and politics, Brian is also a frequent guest on CNBC, Bloomberg, Fox and countless radio shows. For more on Brian, take a look at his editor's page.
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