Today the man connected in China at the highest levels communicated to King World News that the price of gold is heading to $3,000. Even if it is a volatile journey, there is no question that the price of gold is headed significantly higher.
Central Banks Help Gold’s Rebound
May 16 (King World News) – John Ing: Despite the issues of resilient inflation, fiscal profligacy and growing reality of rising debt, the dollar remains strong as US and European rates diverge. Today US inflation once thought “transitory” is much more resilient and likely to stay “higher for longer”. The war on inflation is already lost. Services, wage settlements and increased government spending will ensure inflation stays high in a repeat of the 1970s Great Inflation era. In the inflationary Seventies, the dollar had to be revalued as high inflation and string of deficits forced America to devalue the dollar. In 1985, a string of deficits similarly forced another coordinated multi-lateral revaluation of the dollar with the Paris Accord. Like 1971 and 1985, there is renewed pressure to revalue the dollar, as countries intervene to support their currencies amid growing geopolitical risks, protectionism and America’s foreign entanglements.
Today’s most potent threat is global warming. Yet both Biden and Trump are locked in a tariff bidding war that will make it worse. Beyond the dollar, the belief that imbalances could be fixed with tariffs will invite a tit-for-tat retaliation which could lead to a disastrous global financial war. Further, a return of Donald Trump’s Fortress America capital controls would fail and erode confidence in the dollar which underpins America’s already stretched financial system. The dollar is the weakiest link. Gold will be a good thing to have in the interim.
China’s diversification moves gives them more options which could further affect its huge holdings of US Treasury bonds at a critical time since America needs others like China to help finance its whopping national debt at $34 trillion that is bigger than the combined economies of China, Germany, Japan, India and the UK. China’s de-dollarization moves are joined by the BRICS+ who have also purchased gold, diversifying their assets from dollar denominated debt, including repatriating their gold reserves from the United States, signaling a more fractious world order.
Gold Shock and Au
Gold’s rise was predictable, or was it? While wars, inflation and Trumpism were dominant for the past few years, gold was stagnant while markets were raging. The recent rally was counter intuitive, as the US dollar was also strong. That changed. What happened?
More than anything, gold’s push through $2,400/oz was due to rising US debt which caused money to flow into gold for defensive purposes. Since March, gold has been up $500 an ounce, setting numerous all-time highs as the monetization of debt became an instrument of public policy. Americans can carry a lot of debt, but as the burden grows, the sustainability of their monetary and fiscal policies leaves little margin for error. Gold production peaked in 2019 at 3,300 tonnes and output has declined with miners’ all-in costs moving up from $1,000/oz to over $1,400/oz. Noteworthy is that the dollar index (DXY) has jumped 5% due to its perceived safety amid the conflicts, but gold has done even better.
On the demand side, billions flowed into physical gold as the central banks purchased gold in record numbers totaling 1,034 tonnes or almost one third of mine production prompted by the freezing of Russian assets and layers of sanctions which undermined faith in the international financial system. Seeking to diversify from the US dollar, other big gold purchasers were Russia, Poland, Türkiye and India.
For China, Gold Is the New Critical Mineral
China bought gold in record amounts, purchasing 735 tonnes last year, up 23% over a year ago, and became the fifth largest holder, purchasing gold for 18 months in a row. In contrast, China’s holdings of US Treasuries fell more than $400 billion to a 14-year low of $775 billion, down from $1.1 trillion in 2021. Gold now makes up around 4% of China’s reserves, up from 2.9% in 2019. As Chinese citizens surpass their Western counterparts in their influence on the bullion market, the Shanghai Gold Exchange has emerged as the largest physical dealer in the world in the meantime. The first quarter saw a 6% increase in the amount of gold consumed by Chinese consumers, who imported 367 metric tonnes in the first two months of this year—a 51% increase over the previous year.
We believe fiscal, monetary and geopolitical uncertainties have driven investors into gold as an alternative currency, or the classic store of value. Gold is in limited supply in contrast to the fiat dollars which are in unlimited supplies or cryptocurrency which could be made or seized with a click. Gold is universally fungible and finite. Gold can be bought and sold in US dollars and thus is an alternative to fiat money for both central banks and investors, particularly since gold is also outside the Western based system. The Saudis are selling oil for yuan, and China has grown to be their biggest consumer. This signals a fundamental shift in power from the West to the East, with the petroyuan taking the place of the petrodollar. Dollars are being utilized less and less as bullion gains a greater percentage of the reserves held by central banks worldwide. For China, gold is the new critical mineral. We continue to believe gold will reach $3,000/oz within 18 months.
In case you missed it…
This Could Be The Big One
Eric King: “Bryan, in its early stages your project in Victoria is mirroring the legendary high-grade Fosterville discovery. And now you just released results from your project in PNG that shocked everyone because of the high-grade. In fact, it looks like that project is mirroring K92s historic high-grade discovery. So the company has now become a twin threat in terms of making world class discoveries.”
World Class Assays in the Right Neighborhood
Bryan Slusarchuk: “Yes, Eric, this week’s Great Pacific Gold assays show that the veins on the company’s Kesar Project, along strike and having the same orientation as major K92 vein sets, carry high grade mineralization. Multiple samples from outcrop and from small underground workings returned ultra high grades – one sample graded as high as 244 g/t gold. Note also, in addition to the sampling from in-place occurrences on the property, Great Pacific also conducted a soil sampling program with more than 300 samples taken over a strike length of 5.5km. These soils returned exceptionally remarkable values (see 20.9 g/t gold). As soil sampling has proven to be a very effective tool for K92 Mining next door, these high grades in the soils at Kesar are very encouraging.
Well Positioned for Massive Upside
Great Pacific Gold has assembled a commanding 2500 sq km land package in PNG, known as “The Land of Giants” in the mining world for good reason. These properties range from the early stage and highly prospective Kesar Project through to the more advanced stage, former producing Wild Dog asset. Copper and gold are both important in these systems and Great Pacific Gold has a multitude of high-grade epithermal vein targets along with porphyry style potential. PNG has become a hot exploration jurisdiction due to the success of K92 Mining and the recent entry of the world’s largest gold company to the country. The early mover/first mover advantage that the Great Pacific Gold team has in this new era of PNG mineral exploration is important.
Twin Threat For Major Discoveries
At current budget, Great Pacific Gold has two years of working capital and is therefore well financed to conduct exploration. And as you mentioned, Eric, in addition to the company’s substantial PNG copper-gold project, the company also has a new discovery next door in Australia called Comet where a hole grading 8m at 106 g/t gold was announced at the start of 2024 and is being followed up on now with additional drilling. So, Eric, PNG provides an excellent foundation while Australia provides some amazing lottery ticket blue sky potential. Great Pacific Gold, symbol GPAC in Canada and FSXLF in the US.
Michael Oliver: Gold’s Upside Acceleration Phase And How Investors Can Target Which Mining Stocks To Buy Ahead Of The Gold & Silver Mania
To listen to one of Michael Oliver’s most important audio interviews ever discussing the gold and silver mania, what to expect from mining stocks, the stock market in 2024 and much more CLICK HERE OR ON THE IMAGE BELOW.
© 2024 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the articles is permitted and encouraged.
