With everyone focused on the noise from the Fed, today King World News thought it was a good idea to take a step back and look at the big picture of the war between gold and the Federal Reserve. This led to a remarkable question: Is the price of gold headed above $20,000?
MacroTrends: This chart shows the ratio of the gold price to the St. Louis Adjusted Monetary Base back to 1918. The monetary base roughly matches the size of the Federal Reserve balance sheet, which indicates the level of new money creation required to prevent debt deflation. Previous gold bull markets ended when this ratio crossed over the 4.8 level.
King World News note: The chart below reveals just how far the bull market in gold has to run before it ends in exhaustion. Gold would have to advance 16-times in price vs the monetary base in order to hit the 4.8 level highlighted above. If the monetary base just stayed stagnant and the 4.8 ratio is hit, that means the gold price will be over $20,000.
King World News note: There is a massive chasm between the Fed's balance sheet and today's gold price. This is one of the many reasons the gold price is set for a historic upside surge (see chart below).
King World News note: This shows the long-term Gold/Oil Ratio moving solidly in favor of gold (see chart below).
King World News note: The massive change in trend in the Gold/Oil Ratio chart above is the reason why the mining shares are under strong accumulation. The smart money is buying while the mining shares are at an all-time historic low vs the gold price (see chart below).
King World News note: The bottom line is whether the price of gold is headed above $20,000 or not, investors should be accumulating physical gold and silver while they are highly discounted because of U.S. Fed interference in these key markets. If you are interested in purchasing physical gold and silver for delivery you can call Steve Quayle or his staff at (406)586-4842, or you can email them at [email protected]
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