Here is a look at why it is a very good time to be long gold.
January 5 (King World News) – Email from KWN reader Kevin W.: In 1969, the Federal Reserve’s gold backed the monetary base by about 10% and M2 by 1.4%, and the next decade was extremely positive for gold and gold equities.
Today, Fed gold certificates at market value back US monetary base by 14.2% and M2 by 2.6%. This suggests it is a good time to carry an overweight position in gold and mining shares. On January 21, 1980 when gold peaked in that bull run, gold backed the monetary base by 92% and M2 by 9.7%—that was a good time to be uninvested to gold…
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On a global scale, M2 is about $100T And Global CB Gold reserves at 34,000 MT worth only $2.0T. That means global central bank reserves at market value of only $1920 per ounce only back 2% of global M2. A five fold increase in reserves or five fold decline in M2 is impossible. How about a five fold increase in price of gold?
And what about the Chinese who are clearly understating their SAFE and PBOC gold reserves at about 2000 tonnes as so many astute and trustworthy gold analysts so adamantly state? Well China’s M2 amounts to a whopping $32 trillion, nearly 32% of the global M2. Some of the best analysts presume China has 15,000 tonnes of gold. Ironically that would still represent only 2.8% of China’s M2, which is growing rapidly as is their economy. Again gold backing even in China with 15,000 tonnes is nowhere near where it needs to be to quell the fiat fears.
***To listen to Danielle DiMartino Booth’s powerful audio interview about gold, silver and what surprises to expect in 2021 CLICK HERE OR ON THE IMAGE BELOW.
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