Collin fills in for Kerem and interviews Jordan Roy-Byrne about the potential for a new bull market in gold. Jordan is not sure how long this particular move will last, but it could be a big move that lasts at least the next six months to a year.
Jordan has said previously, “The market will move when the Fed cuts rate because gold rises with declining interest rates or rising inflation rates.” He says, “This is now playing out exactly as it should, but it’s too early to determine how long it will last. The days of a thousand dollar gold is long gone. We are just at the start of something that is going to be historical and last the next fifteen plus years.”
When real interest rates go negative, large funds start looking for a better investment than treasuries, and that’s what can really move the gold market. We need to confirm the break-out in gold, and once we see that more money should come into the sector. It may take a couple of months for the juniors to really start moving, but there are some real potential winners in the juniors.
In a few years, inflation could set off a very long-term gold market as countries inflate away their debt. This happened in the late 1940s where inflation ramped up, and treasury rates remained very low, and they had double-digit inflation to get rid of the debt. Jordan’s new book charts what percentage of the US budget will end up servicing the debt. Inevitably the same thing will happen again today as in the 1940s resulting in a low Fed funds rate while inflation runs higher and higher.