Forecast: Inevitable Gold And Silver Explosion 2020

May 3, 2020

Helicopter Money

All the world’s major central banks are engaged in unlimited currency printing, sometimes known as the “Helicopter money”.  Normally, one would expect the rate of currency printing runs parallel to economic growth.  Now we have economy growth contracting rapidly while currency ballooning!

This article explores the consequences of unlimited printing.  The first chart showed the ballooning Federal Reserve’s balance sheet:

Chart 1 – Fed’s Balance Sheet as of April 9, 2020

Consequences of Unlimited Currency Printing

There are multiple consequences from Helicopter Money.  In this article, we will concentrate on gold and silver prices, as these two precious metals have been real money for thousands of years.

In our earlier article, we discussed the Gold-to-Silver Ratio (GSR) peaks as coinciding with recessions. Right now we have the highest level of GSR = 127 in history.  What do we think the consequences will be?   At least it is reasonable to estimate GSR = 30 to 40.

Chart 2 – Historical Profile of Gold-to-Silver Ratio – from 1915 to 2020

Next we estimated reasonable values of Gold and Silver prices based on historical data.

Chart 3 – Forecasting Near Term Gold & Silver Prices

Consequences of Helicopter Money

The following summarizes 4 key points:

  • Unlimited currency printing debases value of fiat paper currency, that is, leading to the loss of faith in US dollars as well as in other currencies.
  • Unlimited currency printing will only lengthen the current deep recession/depression to 2023-2025.
  • Gold will be inevitably included in upcoming Monetary Reset, as first proposed by Jim Sinclair years ago.
  • Silver mining and silver royalty/streaming companies will be among the most profitable companies in the world, followed by the gold counterparts.

Afterthoughts

As we mentioned previously, we believe in the Invisible Hands of Adam Smith in correcting all the misdeeds of world governments.  In time, there will surely be sunshine for us the believers.

*********

F.T. Dao is a private investor and recently left the corporate world for technical analysis of stock markets.  He holds a PhD degree in physics and has done technical analysis of the market on the side for many years.  He welcomes constructive discussion and can be reached at:  [email protected]  , [email protected]

In 1933 President Franklin Roosevelt signed Executive Order 6102 which outlawed U.S. citizens from hoarding gold.

Gold Eagle twitter                Like Gold Eagle on Facebook