1st American Reserve Blog

A couple of years ago, a commodity and currency analyst bet my friend Gary Alexander that gold would go below $1,000 and Gary won that bet – two years in a row. Now, that analyst has turned bullish and is predicting gold will double from here – to $3,300 per ounce by 2022 (“The Economic and Monetary Conditions are Perfect for Gold,” by Ivan Martchev, MarketWatch, March 30). He shows a dramatic chart of gold bullion rising to an all-time high relative to the CRB Commodity Index. The chart shows gold rising from 1.15 (to the CRB Index) in 2001 to a record high 13.07 recently – a gain of over 1,000% in 19 years.

He compares the current coronavirus crisis to the 2008-09 financial crisis, which propelled gold to an all-time high in 2011, saying, “We have a similar environment at the moment. Interest rates have been dropped to zero at the fed funds rate level, and the federal deficit will be larger than 10% of GDP (larger than after the 2008 crisis) due to the $2 trillion bailout. Record deficit spending and the Federal Reserve’s quantitative easing (QE) with no preset limits is the perfect environment for gold bullion.

Dr. Mike Fuljenz, numismatic consultant for national award-winning precious metals dealer 1st American Reserve says “With record deficit spending and interest rates at zero, we may be faced with an environment where the Fed will keep interest rates below the level of inflation for some time until the economy normalizes after the outbreak is controlled. This would be the perfect environment for gold bullion.”

We don’t know if $3,300 gold is possible by 2022, but Gary and I would not bet against it.