2019: The Year of the Gold Hurricane

It’s that time of year again.

When the masses flock back to the gyms with renewed resolve — which will last about two weeks.

When the country nurses it’s collective hangover — from a year that felt like a 365-day drunken brawl.

And the wobbling heads on the 24-hour news unveil their spectacular predictions for the year — with more fanfare than thoughtful research.

Doom and gloom. Hopeless optimism. Whispers of recession.

It’s a veritable rainbow of contradictory “opinions” and half-baked theories.

Needless to say, I don’t pay any of these folks any attention. These guys and gals are more performers than serious analysts. They’re like professional wrestlers bouncing back and forth off the ropes, throwing punches at the air.

Except professional wrestling doesn’t make you want to tear your hair out.

But if you’re a regular reader, you know there’s one financial analyst I do put stock in.

Jim Rickards.

He’s one of the few folks who predicted Trump’s win, Brexit, and even the 2008 financial crisis. And he’s making predictions like these every week.

To give you an idea what I mean, I’d like to do something a little different today.

Below is a piece Jim originally ran in the Daily Reckoning on December 31.

Generally speaking, I like my copy to be as fresh as possible when I run it here in Money & Crisis. Even a few days old can be old news when the world moves as fast as it does today.

But after I observed certain moves in the market today and yesterday, I realized that I had to run this piece.

In this quick report, you’ll notice that Jim predicts that 1) gold is going to break out the doldrums in 2019, and 2) China’s collapsing economy could trigger a global financial crisis.

Since the market opened yesterday, 1) gold has started to soar, and 2) an economic report of China caused global stocks to swing wildly.

Read on and find out why now is time to invest in gold.

All the best,

Owen Sullivan

Owen Sullivan
Editor, Money & Crisis

P.S. After more than a decade of secrets, Jim has revealed this incredible information. You might not know this… but Jim was involved with developing a special tool while working with the U.S. government.

“Project Prophesy,” as it’s come to be known, can predict surprising political and economic events before they happen. Click here

Gold Will Rally in 2019

Jim RickardsAs we say goodbye to 2018, let’s take a moment to reflect upon my favorite form of money: gold.

Gold began the year around $1,320. It’s ending the year lower, but not much lower.

Over the year, the dollar price of gold has gone down a little, then back up a little, then back down a little and ended up not far below where it started.

This has been about the most unexciting gold market since 1999. The price action is like a sailboat, mid-ocean, with no engine and no wind — it just sits there.

Call it the gold doldrums. Not only is it not profitable, it’s actually boring.

This is the Story of a Hurricane

Is there any good news on gold prices? Emphatically yes, for two reasons.

The first point is that doldrums never last. Sooner or later the wind picks up and the boat is underway again. In extreme cases, that wind can turn into a hurricane.

The perfect example is 1999.

Gold reached a 30-year low of $253 per ounce on July 16, 1999, after a long period of slowly declining prices with little volatility.

From there, one of the greatest gold rallies in history began, which peaked at over $1,900 per ounce on September 1, 2011, a 650% gain in 11 years. Investors who bought when gold was boring and out of favor made fortunes.

Doldrums can turn to hurricanes almost overnight. Gold prices went from boring in 1999 to red-hot in 2000 while most investors paid no attention. The time to prepare for gold’s next price hurricane is now.

There were many reasons for the gold rally that began in 1999. There was a recession in the U.S., the bursting of the dot-com bubble, the 9/11 attacks, the global war on terror, the Iraq War, and the emergence of Russia and China as major consistent gold buyers.

None of these events was easily foreseen in 1999, yet they all happened in a matter of just a few years. The current doldrums in gold prices should be treated as a favorable buying opportunity, not a cause for despair. In a few years, we will look back at $1,200 per ounce as the last great entry point.

The second point is that gold has held its own despite strong head winds. The Fed has been giving markets a double dose of monetary tightening with interest rate hikes since December 2015 and reductions in the money supply since November 2017. That’s not likely to change anytime soon, as Federal Reserve Chairman Jay Powell indicated on Dec. 19.

Since monetary policy acts with a lag, the impact of these tight money policies is just hitting securities markets in a big way now. Higher interest rates make gold less attractive since it has no yield.

The fact that gold has held its own since December 2015 despite monetary tightening says something favorable about underlying supply and demand in the physical market.

Russia and China are putting a floor under prices even as miners struggle to expand output and make new discoveries.

Hedge funds can manipulate gold futures contracts all they want. At the end of the day, supply and demand of physical gold will determine the price. If gold manages small gains in a tight money environment, it will produce much larger gains if the U.S. and global economy slow and the Fed has to reverse course and pause on future rate hikes to avoid a new crisis.

The 2019 Financial Panic

What are some of the economic and political conditions that could produce a recession or even a new financial panic?

It’s impossible to know exactly when a triggering event will occur, yet the signs of such an event are everywhere. Just look at the stock market these days. But it’s much more than that.

Venezuela is an economic and human rights tragedy. Turkey, Argentina and Indonesia, all major emerging-market economies, are in complete meltdown. India, Malaysia, Brazil and Mexico are facing severe challenges.

China’s growth is slowing and its debt is nonsustainable.

The trade war between the U.S. and China is already taking its toll and will get worse. Then there are geopolitical hotspots like the South China Sea, North Korea, Syria, Iran, Ukraine, Taiwan and others that could turn into shooting wars in little or no time.

So there’s the setup. Demand for physical gold is strong. New supply from mines is flatlining. A catalytic event is just a matter of time. It could be something from the list above or more likely something not yet on anyone’s radar. Still, it’s coming.

Investors who believe they can jump on a moving train once the rally in gold begins will discover they’re too late. Markets can go from no volatility to high volatility overnight. In a major rally, the biggest gains are often in the early days. You need to have your gold allocation in place now to participate fully when the doldrums turn into a hurricane.

There’s no need for investors to take an “all or nothing” approach. A relatively small portfolio allocation to gold, say 10% of investible assets, will provide ample upside when gold takes off as it did in 1999, and at relatively low cost if it continues to move sideways for another year.

That’s the best kind of insurance you can buy.


JJim Rickards

Jim Rickards
P.S. This could be my most important message for the New Year.

To date, the CIA has given clearance to fewer than 100 people in the entire world involved with this project. But as a tax-paying American citizen, you deserve to know the truth.

NOTE: This short clip has NOT been sanctioned by the United States Intelligence Community.

Click here for all the details on “Project Prophesy.”

Chris Campbell

Written By Owen Sullivan

Owen Sullivan isn’t a millionaire or one of the Wall Street elite. He was just one of the many folks who was hit hard when the housing bubble burst… and decided he was never going to let that happen again. Since then, he’s worked with industry experts to develop strategies and techniques to bulletproof his finances — and yours — against the next crisis. His methods don’t require years of financial experience. These are simple strategies that anyone can follow. After all, financial prepping shouldn’t be reserved for a select few.