January 1, 2023
More decisions are made this year-end holiday weekend than at any other time. Every decision is based on a vision of the future. Tonight, I’ll keep mine simple. I see that 2023 will be the year of the Gold Bull.
Gold cash and futures trading reached a cycle bottom at the beginning of November. I started to write about that as I watched a distinct change in the US Dollar trend and cycle pattern. Interventionists like the US Fed, the Bank of England, and the Bullion Banks of both countries have made every possible effort to convince investors that the Dollar is king and that the Gold Bear that started in October 2020 will continue for a long time yet. But I don’t believe they have much ammunition left. Neither do the other central bankers in the world who are buying Gold in record quantities. Investors in these other countries who are buying Gold in their currencies have already confirmed, in technical terms, the new Gold Bull.
As the wealthiest people in the world are now buying Gold and Silber bullion bars and coins, up to 5 to 10% of their liquid wealth as a hedge against rapidly depreciating fiat money, I made a business to renew my business agreement with BMG Group Inc. BMG (https://bmg-group.com/), a Toronto firm, has long served a global market in providing safe and legal purchase and storage of bullion bars and coins. As their promotion states, “BMG was one of the first precious metals bullion management company in Canada to become an Affiliate Member of the London Bullion Market Association (LBMA). This validation and endorsement is only bestowed upon firms that meet the LBMA’s rigorous industry standards on refining, reliable trading and Good Delivery practices.” BMG Group serves a worldwide clientele.
In addition to recommending bullion to my clients, my portfolios are at least 70%-weighted in Gold and Silver equities. I believe that 10% invested in Gold & Silver bullion and 10% in equities is warranted for the wealthiest investors.
2023 will be the year that Central Bank Digital Currencies (CBDC) begin to replace fiat money. I have never been a fearmonger, but the alarms raised by that network of high-profile personalities make sense. Investors can no longer ignore the deficits and debts of governments worldwide. The macro problems today – inflation, war, supply chains, etc. – are primarily transitory. But deficits and debts have passed the point of no return. Central banks can no longer control what governments and global societies are doing regarding spending and the debts that have accrued without asset backing. Without repricing its holdings of Gold bullion at new record high prices and on a marked-to-market basis, the US Treasury is insolvent. The US Dollar is without financial backing. Other central banks and wealthy people know this, which is why they are selling Dollars to buy Gold. Only the futures trading of the Bullion Banks are holding the US Dollar price of Gold low, and that intervention cannot last. Europe and UK are in the same dire straits. The only solution of these governments appears to be much higher taxation, but companies and individuals avoid taxes with sophisticated offshore schemes. For central banks, the decision has been to raise policy rates. Still, in the case of the US, the Treasury is virtually bankrupt now – unlike in 1980 — and every one percent interest rate increase is squeezing the Treasury as well as the economic life out of the country, particularly in real estate, which is 20% of the economy but already becoming a crisis. So, to me, the answer governments and central banks have decided on is CBDC and track all money transactions to ensure all taxes are paid. In response, wealthy people are selling their fiat money and buying Gold. They had been resorting to cryptocurrency until the US authorities took control via the use of ETFs and futures trading, which enabled them to destroy that market. But no interventionist has been able to destroy the Gold physicals market for thousands of years. That is where we stand today.
I believe that as soon as Gold appears to be testing former highs close to US$2100, which I foresee this year, the interventionists led by the Fed, ECB, and Bank of England will introduce their CBDC and call in all fiat money, which they will destroy. These governments will enact legislation to require payment systems to use only CBDC, which is only the beginning of a push to higher taxation and the shutdown of offshore transactions. Those who do not comply will face government holds on their money – the ultimate in unfair monopoly practices. The system will henceforth openly control the public, as warned in George Orwell’s dystopian novel, Nineteen-Eighty-Four. The only true freedom will be for those who hold Gold & Silver bullion bars and coins. Higher interest and tax rates will smash our wealth in equities. Price-earnings multiples will soon fall from 27 to half of that. Inflation will no longer be a problem. Our concern will soon be deflation, starting soon in the real estate market as well as in the equity market.
Despite this dour outlook, I look forward to my Precious Metals, Uranium, and Oil Market investments – particularly the precious metals. As long as Russia pursues its war with Ukraine, the Oil & Gas market will have price support, and as long as energy prices remain high, the Uranium market will get stronger. The Copper market is largely dependent on the economies of China, India, and other emerging economies, which comprise half the global population, so there is downside protection there as well, even as demand will drop in Europe and North America.
So, I see 2023 as another year of global markets re-set, but one where there will be opportunities as well as the apparent threats.