Gold Hits a New High. Here's Why it Goes Higher...

After suffering severe denial, it appears the mainstream and the markets are starting to understand the real story in inflation.

$2,702.

It was less than a year ago the markets were excited about gold hitting $2,000 an ounce.

Today, it’s 35% higher.

Now the question is whether gold can get to $3,000…

And if so, when…

And how long it could stay there…

Or even go higher.

So what’s the deal? It’s obvious.

Inflation.

Even the mainstream, who have ignored the problem for too long, is starting to get it…

Bloomberg reports:

‘Gold has soared 30% this year and is on the cusp of reaching $2,700 an ounce. A measure of long-term expectations for consumer prices, called the Treasury Breakeven rate, climbed steadily over the past month and now stands around 2-3% - above the Federal Reserve's target.

‘“There is a bubbling sense that the absolute conviction of inflation returning to 2% might be more faith than fact,” says TS Lombard economist Steven Blitz

‘To be sure, most investors don’t expect the economy to face another big spike in price pressures. Treasury markets are calm, the ECB [European Central Bank] is about to cut rates again and the UK consumer price index recently fell below 2%. But sceptics warn that inflation will be harder to vanquish than people realize - the so-called “last mile problem.”’

Contrary to popular belief, gold isn’t always a great barometer of inflation.

During the inflationary period after COVID, gold didn’t keep pace with inflation.

In fact, for much of that period, many folks thought Bitcoin was better protection against inflation.

But getting back to today, and getting back to gold, it’s clear the market can see what's happening.

While politicians and central bankers still pretend they are trying to prevent inflation… the market knows better.

That's why gold is up so much. And why it has a good chance of going much higher.

Remember our take on this.

We don't believe for one moment that governments and central banks want lower inflation.

They want and need higher inflation. For the simple reason that governments are in so much debt, the only way they can maintain repayments on that debt is to allow inflation to eat away at the debt.

It's the ‘dishonest’ way to repay debt.

But realistically, it’s their only option. They won't pay it back honestly.

They can't and won't default by refusing to repay the debt - as bad as it is to default, at least it's being honest about the inability to repay.

And they can't cut spending, because it will cost too many votes. Besides, even if one party promises to cut spending, the other will promise to increase spending.

In short, it all makes a good argument for owning gold.

Sure, gold has also disappointed many times in previous years. So don't be surprised if it disappoints again.

But given what we know about government debt and inflation, give us gold any day.

We look forward to seeing you back here tomorrow.

Kris Sayce

Editor, Crack of Doom

Issue 49 of 10,000

(We believe in the importance of setting goals. And we figure what better way than to set a big goal from the beginning. If all goes to plan, our final issue of Crack of Doom will be sometime in the 2060’s!)

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