Chris’ note: Chris Reilly here, managing editor for Casey Daily Dispatch.
Today, I’m featuring a recent interview I did with Crisis Investing chief analyst Nick Giambruno on what’s ahead for gold.
Nick says the catalysts that he saw in May, which helped propel gold to a six-year high this summer, are stronger than ever.
Below, he breaks down why 2020 will be a big year for gold… and why all gold bugs should be paying attention to the Federal Reserve’s recent actions…
Chris Reilly, managing editor, Casey Daily Dispatch: Hi, Nick. As you know, we saw gold come alive this summer. It broke a six-year high and crossed $1,500 an ounce in August. It’s cooled off a bit, now at $1,476 an ounce. I’d like to know what you see ahead for gold as we enter 2020…
Nick Giambruno, chief analyst, Crisis Investing: Sure, Chris. In May of this year, I told my readers that the stars were aligning for gold – in a way that was unprecedented in recent history. At that time, I told my readers that a huge gold bull market was about to begin. Then, several weeks later, that call proved to be quite accurate when gold broke through its six-year trading range. It was very significant news.
And the reasons I was so bullish on gold have only gotten stronger today.
I look at the fundamentals more than the day-to-day price action of gold… which is mostly just noise. It’s more important to look at the big picture for gold. And that’s as bright as ever. The fact that it’s gone down a little bit is a blessing, because that allows people to get in at favorable prices, which I suspect won’t be the case for much longer.
Chris: What’s one of the main reasons you expect gold to take off?
Nick Giambruno: One thing that’s accelerating is central banks – which are the largest players in the gold market – are continuing to buy record amounts of gold. Not only are they buying record amounts of gold, they’re taking physical delivery.
That’s a big distinction, because in the past, central banks would buy gold and store it in New York, or London, or something like that. But now the trend is that these central banks around the world, whether it’s Russia, China, Germany, Poland… they’re all taking physical delivery. This is unprecedented in recent history. There’s sort of a physical gold rush going on here by the biggest players in the market.
Chris: And why’s that?
Nick Giambruno: I think there are several reasons. First reason is they’re worried about the big picture and the current global economic situation. They see what’s going on.
And while these central banks are buying gold and taking physical delivery (as much as they can get their hands on), they’re also devaluing their currencies.
We’re in the middle of a global currency war, which is a completely wrong-headed and misguided notion. But nonetheless, these countries, including the U.S., feel that they need to destroy the value of their currency so that they can get some sort of trading advantage because their products are relatively cheap to others. It’s completely ludicrous. But nonetheless, the world seems to be locked into this self-destructive cycle.
Recently, Trump came out and begged the Fed to devalue the dollar even more. He’s called for negative interest rates.
This gets into reason two: central banks destroying their own currencies.
Not one central bank I can think of around the world is being a good custodian of its citizens’ savings. This is bad stuff. This is counterfeiting. If you or I were to do what these central banks are doing, we’d be arrested.
Chris: Can you explain what they’re doing in more detail?
Nick Giambruno: Well, just earlier this year, the Fed was in a tightening cycle. It completely reversed that, and has gone into an easing cycle, cutting interest rates, reverting to money-printing programs. I don’t like to use the term “quantitative easing” because it’s a euphemism for counterfeiting. It’s camouflaging what it’s doing, and as I mentioned earlier, it’s debasing the currency.
It’s stealing purchasing power from savers. It doesn’t want people to really know what’s going on, so it uses jargon like “quantitative easing,” which the average person on the street has no idea what it means. It sounds academic. It sounds too technical.
These people are really nefarious. They don’t have your best interests at heart. They’re actually your enemy if you want to think about it in the correct term. They’re deceiving you about what they’re doing, and they’re stealing from you. But the upshot here is that these actions are all good for gold.
Chris: How are their actions good for gold?
Nick Giambruno: Because gold is money. Gold has been money for 5,000 years, and it’s competing with government forms of money… this fake paper fiat money.
Think of it like any product in any marketplace. When you have competing products, you want to go with the one that’s better. What the governments are doing is destroying their own product in the marketplace, which is money.
Money is no different than any other product. They’re making their product less attractive in the marketplace relative to gold. That’s why it’s good for gold.
Chris: Got it. Do you have any tips on how to get started owning physical gold today?
Nick Giambruno: Yes. There are many ways you can buy physical gold. Jewelry, coins, bars… but I would advise people to keep it simple. Stay away from collectible coins, which can be confusing and carry high premiums over the metal value.
What you really want, and what I like, are coins that are internationally recognized, and have a very low premium. What helps with international recognition, especially now that China is such a big market and player in the gold market, is 24-karat gold – or in other words, gold with a purity of .9999.
My favorite one in that category is the Canadian Gold Maple Leaf 1-ounce coin. It’s recognized internationally. Beautiful coin. There are others in this class of coins, too, but that’s one of my favorites.
Chris: That seems like a great starting point. Thanks for the time, Nick.
Nick Giambruno: My pleasure, Chris.
Chris’ note: Recently, we broke new ground at Casey Research. Nick Giambruno revealed a revolutionary way to make big money from gold – even if the spot price stays flat or continues to fall.
We estimate only one in 10,000 gold investors knows this secret. And yet… it could help you pocket a huge payday.