Many of my friends laugh when I try to tell them that gold in today’s market is a good investment and will soar in the next 5-10 years. Many of them are much more concerned with cryptocurrencies (which I am not against; however, I think both gold and cryptocurrencies should be in your portfolio). Now, I am not telling you to sell your stocks and buy up a ton of gold. What I am telling you, is that I expect the U.S. Dollar to devalue due to the hyperinflation we are now seeing, and gold prices will skyrocket.
I recently finished the book, The Great Devaluation by Adam Baratta, and I highly recommend this book for anybody interested in investing. He first explains how the Federal Reserve was created and how gold originally backed the U.S. dollar until Richard Nixon broke the Dollar from the gold standard. Presidents have used gold to devalue the U.S. Dollar in times of crisis (President Roosevelt for example in 1933).
Based on what I have learned, I am going to tell you why I will be putting some of my money into gold over the next several years. Let me first explain to you why gold is valuable in today’s world. Gold is an element that cannot be made. Thousands of years of failed alchemy projects have proven that mankind cannot combine other materials to create gold. With inflation soaring and debt rising at unprecedented levels around the world, we are starting to see the elite and many countries (The U.S., China, Russia, and Turkey) buy gold.
90 years ago, one ounce of gold was worth $20. Now, one ounce of gold is worth over $1,800. Read that again. Famous investor Paul Tudor Jones stated in 2018, “Gold is the number one asset to own in the coming years as demand increases”. So the question is, why are the elite and many countries buying gold?
The reason is because Federal Reserve is using this tactic called “Quantitative Easing”, or to put in layman’s terms, “printing an absurd amount of money” to increase the liquidity of U.S. banks and to inject trillions of dollars into the economy. 80% of all U.S. Dollars in existence were printed in the last 24 months. Read that again. People are not realizing how much money the Federal Reserve is creating out of thin air in order to keep the economy afloat. While the stock market may look decent, our debt is starting to overcome our assets, and the Federal Reserve is keeping their interest rate at zero.
The Federal Reserve does not want you to think that gold is a valuable investment. Gold is the anti-dollar. Gold is a reserve, and the Federal Reserve manipulates reserves every day. However, with inflation soaring and quantitative easing practices becoming more prominent, eventually the Federal Reserve must try and devalue the U.S. Dollar. Do not bet against the Federal Reserve. They will find a way to devalue the U.S. Dollar before it is too late (we have seen them do this in the past). As a result, gold prices will soar, and owners of physical gold will flourish.
David Baratta has made a prediction that I believe will be true as well. The Federal Reserve cannot continue to keep printing money at this rate without creating a recession. They will be forced to devalue the Dollar to avoid another significant recession. As the Dollar devalues, and the Federal Reserve attempts to manage the balance sheet, gold could soar to $10,000 an ounce by 2027. Again, I am not saying to put all of your money in gold; however, I believe you would be a fool to not have some in your portfolio. The state of the market is clear and there is only one path forward to curb inflation. The dollar will devalue in the near future, and the gold price will skyrocket.