Gold

 News

Gold going to $3,000 as U.S. deficit rises sharply as a percentage of GDP 

While many analysts are bullish on gold after the Federal Reserve announced its open-ended quantitative easing program at the start of the week, WingCapital said that it is watching rising U.S. debt compared to GDP. They said this will be a bigger factor on gold compared to the Federal Reserve ’s unprecedented monetary policy. 

“Historically we notice that the level of deficit relative to GDP exhibits even higher correlation than the size of Fed's balance sheet,” they said. Specifically, we observe that gold's previous secular bull run ended when deficit / GDP started declining and did not bottom until the ratio's trough in 2016.” 

In this environment, the analysts said that gold prices could rise to $3,000 over the next three years.

Opinion: The economic and monetary conditions are perfect for gold

Interest rates at zero, record deficit spending and the Federal Reserve’s quantitative easing with no preset limits is the perfect environment for gold!

Of the industrial precious metals, silver is the most interesting. It is also at a record discount to gold bullion if one looks at the famous gold-silver ratio, which went to 125 at the March extreme, which is an all-time high. That means one ounce of gold could buy you 125 ounces of silver, although we have retreated some on that indicator as silver has rebounded [Currently as of 3/31/20 114 to 1 ratio].

DYI:  I will be updating all of my formulas for the month of April tomorrow.  See you then! 

 DYI