The next major scene in gold’s bull market act is about to take stage… with prices expected to skyrocket.
Rapidly increasing demand and stagnant mine production levels are quickly leading to a deficit in supplies, forcing gold prices higher.
Meanwhile, gold’s upward momentum will become greater as more and more investors and institutional funds wake up to the fact that they need to get out of the U.S. dollar.
Next year, I believe we could see gold prices in the $1,500-$2,000 range as the dollar continues to wane in value.
Just this week, Russia and China decided to reject the U.S. dollar and use their own domestic currencies for bilateral trade — a move that’s part of a developing economic relationship between the two countries.
Back in September, for instance, Russia and China inked a $6 billion deal for coal and coal-to-liquids projects over the next 25 years.
Once other countries decide that they need to follow suit, the entire house of cards could come tumbling down. In the short term, the powers that be will try to prop up the system while they get their own personal affairs in order.
But it is inevitable that they will lose control. And gold prices will be forced to scream higher.
Gold to scream higher in 2011
The main driver of rising gold prices will not be the short-term speculative demand that comes from mining shares or commodity futures, but from longer-term buying interests seeking risk protection for their savings due to depreciating worldwide currencies.
Gold is moving up against all currencies worldwide. And while some may flee the U.S. dollar to go into the euro or some other fiat currency for a time, most will eventually come to gold as the only true safe haven for their savings.
These buyers are strong hands with long-term interests who will be seeking to protect wealth. This trend is already underway, but will accelerate greatly in 2011.
You have to remember that there have only been about 150,000 tonnes of gold ever mined out of the ground. (If you melted it into a giant cube, it would only measure 20x20x20 yards.)
That means it only takes a small percentage of investors to move into the gold market to move prices much higher.
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Changing of the guard
The unsustainable U.S. debt structure looks like it’s getting ready to implode. This instability translates into a worldwide diversification away from the dollar.
A changing of the guard appears to be underway — meaning the days of the dollar as the international reserve currency appear to be numbered.
Keep this in mind as you make your investment decisions for 2011…
Gold should do very well this year — and for many years to come.
One way I’m hedging my portfolio is with a new, one-of-a-kind investment vehicle designed to double the return of gold prices.
Mind you, this investment has been all but ignored by media since its launch… After all, gold has never been understood or appreciated by the mainstream, despite its historic economic significance.
Still, for every 1% increase in the price of gold, this new gold investment vehicle delivers a positive 2% return.
My colleague Luke Burgess just finished filming a presentation explaining the details of this investment. You can check out this short video here.
Analyst, Wealth Daily
Investment Director, Insider Alert and Mining Speculator