The Price of Gold is Going Higher

The effects of COVID-19 are creating a firestorm of catastrophic upheavals across many industries. Governments have resorted to printing money, artificially inflating businesses and floating the economy at unsustainable levels. **Smart investors have taken notice.** Fund managers and analysts have already made their case for a weaker dollar and a stronger Gold Price in the coming years. They know that the current macroeconomic environment is setting up for the largest demand-supply mismatch in the history of gold. **Dwindling Supply of Gold** The supply of gold is determined by two things: 1) the total amount of un-mined global gold reserves and 2) any new gold discoveries being made. **Why is this important?** Because there have been ZERO big gold discoveries in the last 3 years.  While there are still plenty of gold assets to be developed, the lack of new major deposits being discovered means that the project pipeline is increasingly short of large, high-quality assets needed to replace ageing major gold mines. Without any new discoveries being made, the future supply of gold comes into question. And we all know what happens to the price of a commodity when there is a shortage of supply. **Monetary Dilution + Devaluation of USD** The amount of monetary dilution from the world’s largest central banks is starting to reach unprecedented levels. **Here is an interesting fact…. the United States printed more money in June of 2020, than in the first two centuries after its founding.**  Just listen to the Chair of the Federal Reserve, Jerome Powell, who said this week that the Fed was using its “full range of tools” to respond to the pandemic: printing money, keeping interest rates close to zero, and making asset purchases steady at $120 billion per month. **What will this lead to?** **It seems as though the U.S. is about to experience one of the greatest inflationary periods in world history.** In an inflationary economic environment, the demand for gold increases, as gold provides investors with a hedge against inflation. In a declining-USD environment, the demand for gold also increases, as there is an inverse relationship between USD and the price of gold. It is evident from the current state of international markets that we are setting up for the biggest supply-demand mismatch in gold’s 2000-year history. **It would be wise to add some gold stocks to your portfolio, if you haven’t already.**