As forecasted in my earlier post a little under 3 weeks ago here. Will the prediction of $3,000 per ounce spot price of gold by prominent investors and pundits like Peter Schiff and Jim Rickards also come true? Schiff did predict the 2007-2008 crash.
Even with Federal Reserve(FED) quantitative easing(QE) bringing the Federal Funds rate to historic, near-zero, lows fueling the stock and bond market bubbles throughout pretty much every year since the 2007-2008 crash, and thereby keeping demand away from gold, the previous record high of $1,920 per ounce spot price has now been broken. There isn’t much more room for the FED to lower rates any futher, putting further strain on their ability to do more QE or similar liquidity injections of United States Dollars(USD) into the economy. Therefore, with less QE keeping demand away from gold, this author is predicting that the flood gates have been opened for gold’s per oucne spot price to reach the heights of Rickard’s and Schiff’s prediction.
2020 is indeed a historic year, for more reasons beyond COVID-19.
Just as August 15, 1971 was a historic date, the one in which then President Richard Nixon “temporarily”(though truly and obvisouly permanently) took the USD, and thereby the entire world, off of the gold standard by ending the Bretton Woods Agreement, today’s date, July 27th, 2020, is a historic date as gold’s all-time new record-breaking price in USD after nearly nine years.
One last thing to note, in 1971, when Nixon “temporarily” took the U.S. off the Bretton Woods Agreement, the USD could be redeemable for $35 per ounce of gold. So, let’s say your wage was $1.60 per hour back then, the minimum wage of 1971. That means, as the poorest employed American, you had to work nearly 22 hours to be able to buy one ounce of gold(excluding taxes, deductions and those sorts of variables). In 2020, nearly 50 years later, the price of gold is now above $1,900 per ounce. With the federal minimum wage at $7.25 per hour, the poorest employees in the United States must work over 262 hours for that same ounce of gold, representing a decline in purchasing power by nearly 12-fold! How’s that for 50 years of withdrawing from the crazy, arcane, obsolete, gold standard?!