The title says it all, what would the world look like with gold at $3,000 an ounce? What would it take to get there? Let’s look at all the determining factors.
First, we must look at the atrocious amount of debt that we are in, currently just over $22.2 trillion. That number is going up so fast we literally can’t even count the individual dollars as the debt rises. This is causing the U.S. to print more money (about $233 billion every year) which in turn is causing the value of the dollar to decrease. Since the value of the dollar is decreasing, interest rates must go down to entice people to get more loans, which causes more debt per citizen, which causes the debt to rise. But, how long can those interest rates stay down? They will have to bring them back up to put pressure on the value of the dollar to rise. Do you see the confusing cycle?
Real estate, yes this plays a role in this rollercoaster of interest rates. The Fed can’t lower the interest rates because they want to strengthen the dollar. This is causing people to not buy houses because interest rates are too high, they’re waiting for the interest rates to drop before they purchase. They also know that since the interest rates are high, the prices will drop because nobody is buying so they wait for the price drop and interest rates to drop. This slows the economy. Starting to come together now?
The overall value of the dollar has decreased as well, this has strengthened the markets, they have sky-rocketed since 1970, and if the dollar were to devalue 6.5% as much as it has since 1970 the price of gold would shoot up to $3,000 an ounce. While that doesn’t seem like much of a drop the Fed knows how to manipulate the rates to keep the dollar somewhat steady. But I ask this. How long can the Fed keep this up until the bubble bursts? Gold at $3,000 an ounce? If the dollar drops to nothing as it did during the great depression, gold will likely be an astronomical $20,000 an ounce. While that sounds great for your portfolio, remember why it’s that high.
While this scenario seems a bit out there, we honestly aren’t that far off from all those pieces falling in place for it to happen. Now is the time to invest, don’t wait until the price of gold starts to climb, don’t wait until it’s too late. Get yourself protected now while the price is still low, protect your portfolio now while the time is right.