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.