Interest-rate cuts across the globe, growing expectation of a U.S. recession, intensifying geopolitical tensions — this is not an ideal scenario. Except, perhaps, for gold. All those issues are pushing gold prices higher, as the optimal safe-haven asset takes on greater appeal with investors.
After solidifying at over $1,450 per ounce during the last few weeks, gold is on-track to spike higher than $2,000, predicts Gerald Celente, famed controversial gold expert, in an interview with ThinkAdvisor.
Further, “the greatest depression” ever is coming soon, far worse than the Great Depression of the 1930s; and a potential war in the Middle East will trigger World War III for sure, he predicts.
Celente argues that the equity markets have peaked and that America is already in “a stage one recession.”
Founder of Trends Research Institute, publisher of Trends Journal (Its tag: “History Before It Happens”), Celente, 72, accurately called Donald Trump’s election, the Trump market rally, the dot-com debacle and Black Monday.
Though critics charge that his forecasts are chiefly derived from intuition, the trends detector insists he assiduously studies a wide range of global government, business and political data and statistics on which he bases his predictions.
Consultant to industry and government and a popular keynote speaker, Celente has been forecasting a “gold bull run” for six years now, contingent on gold’s reaching $1,450 an ounce, when it would be poised for new highs.
ThinkAdvisor recently spoke with Celente from his office in Kingston, New York. As an individual investor, he deploys funds to gold and real estate only. In 1978, he bought his first gold bars for $187.50 per ounce.
Here are highlights of our conversation:
THINKADVISOR: Has the yield-curve inversion led more people to invest in gold?
GERALD CELENTE: Yes, because they have nowhere to put their money. Ten-, 20- and 30-year bonds yields are in negative territory. People who don’t want to get negative interest rates are gambling in the gold market. The central banks increased their gold-buying last year at the highest rate in 50 years.
What’s gold’s downside risk right now?
At the very worst, it would go to around $1,400, which is really nothing in the futures market. As we speak, it’s $1,504. It’s been solid for weeks, so the downside risk is minimal, and the upside is very strong.
I’ve been saying for six years that gold had to break about $1,450 an ounce for it to gain real strength. It’s hit toward the $2,000 market, and it’s going to keep going.
What are the risk factors?
The major one is that the global economy gets really strong, currencies regain their value and people are happy with investing in securities markets. So, the stronger the dollar and the economy gets, the weaker gold goes. But the equity markets have peaked. I’ve said this for five months now. They’ve had their best day.
Why are interest-rate cuts positive for gold investing?
Because the dollar is getting cheaper relative to other currencies. This year already, 30 central banks — in Iran, India, Mexico [for example] – have lowered their interest rates. They’re all in trouble. They need money.
The central bank in Germany — the strongest economy in Europe – just warned that they’re going into recession. They’re going to keep printing more money, but the money is valueless. The only reason the U.S. dollar is staying so strong is that the other [currencies] are so weak.
What does the price of oil have to do with gold?
A lot. If war breaks out in the Middle East, you’re going to see oil prices spike above $100 a barrel. That will bring down the global economy in equity markets, and it will be the beginning of World War III.
What’s going on now with two nuclear-armed nations — Pakistan and India — is a clear indication of the dangers ahead. India has lowered their interest rates four times in a row. Pakistan has no economy left. They’re borrowing money from anybody they can.
Look what’s going on in Argentina [worries over debt default]. The U.S. is in better shape than all the other countries, but it’s only temporary. That’s why Trump is calling for lower interest rates. He knows.
What specifically has he done about the situation?
Last week [Aug. 14], when the market was going down 800 points, he called the major banks. In the next three days, the markets went up. Christmas Eve of 2018 [when markets plummeted], Treasury Secretary Mnuchin got on the phone and called up six banks.
The markets went up 1,000 points in a couple of days. You just saw the same thing happen. They’re rigging the markets. They’re bringing in [the president’s] “Plunge Protection Team” [created in 1988].
What’s the banks’ position?
Banks know what’s going on, and they’re doing everything they can to stop it. Bank stocks are going down dramatically because of the very low interest rates. They can’t make money on those rates, and [the Federal Reserve] is going to keep lowering them.
You write that “the greatest depression” is on the way. Please elaborate.
It’s going to be much worse than the 1930s Great Depression. There are a number of reasons: In the Great Recession  interest rates [had been at a level of [5.25%]; now they’re at 2%. So there’s no room. The central banks in Europe are already at negative interest rates.
In the 1930s, you didn’t have severe immigrant crises. One of the top trends we see is human waves of people worldwide leaving poverty, corruption and violence. We’re going to see that more and more. People will be flooding out of Africa, South America [etc.]. In 1927, there were 2 billion people; today we have 7.6 billion.
So are you saying that the stock market will crash, the U.S. economy will go to hell and the greatest depression will hit?
Yep. You’re going to see violence and demonstrations. That happened during the Great Depression: protests, riots, strikes. This time it will be even worse because there are many, many more people
When do you think the market will crash?
It could happen any time. You can’t predict it. There are too many wild cards. Two are India and what’s going on in Hong Kong, which is needed to do business in Asia. But now it’s under threat. This is very serious. If anyone thinks the Chinese aren’t going to overpower 7 million people from Hong Kong, they’d better grow up.
In a nutshell, what do you foresee playing out?
History will repeat itself: Trade wars, currency war, Great Depression, World War II. Trade war, currency war, Greatest Depression, World War III. It’s already heating up. Just look around the world!
How do investors prepare for the greatest depression? Buy gold?
I’m not a financial advisor, so I don’t give financial advice. But for me, personally, it’s “the three G’s”: guns, gold and a getaway plan. I mean it!
When you began investing in gold in 1978, what form did you buy?
I was doing the futures market and also buying 100 ounces of gold bars at a time.
What about now?
I put gold into my retirement [savings] with [SPDR Gold Shares] GLD ETF. I don’t need any more physical gold. I’ve got enough.
Your only other investing is in real estate, correct?
Yes. I own property. I don’t have the mental capacity to play the security markets. It’s not my strength. I don’t know how to play those markets. People are making a lot more there than I am; so I don’t knock it. I’m just saying it’s not my forte. But the equity markets’ best days are gone for a while.
A new study, by Gold IRA Guide, found that nearly a quarter of respondents ages 18-34 would choose $10,000 worth of Bitcoin over $10,000 worth of gold. What’s your take on bitcoin?
Bitcoin has its place. However, it’s digital nothing. Gold is real. It’s solid. It’s been around since the beginning of time. It’s had its value since the beginning of time.