Back in May, I wrote about how despite the recent rally to over $2,400 per ounce, gold still hadn't topped the 1980 all-time high when adjusted for inflation. As I mentioned:
The 1970s and early 1980s were marked by high inflation, geopolitical tensions, and economic uncertainty. Things were bad. A lot like right now. So, investors flocked to gold as a safe-haven asset, also much like today. This surge pushed gold to $850, or about $2,670 in today's dollars.
I concluded with this:
Since I don’t see any of the troubles I’ve written about in these pages letting up, and gold is the only financial asset that’s not simultaneously someone else’s liability, it's absolutely headed much higher. We will blow past the all-time high of $2,670 and leave it far behind before long. There’s no doubt in my mind about it.
Gold Breaks $2,700
Well, just hours ago, gold finally broke through the $2,700 level. That means it’s decisively taken out its inflation-adjusted all-time high from 1980—and it hasn’t even been six months. You can see this in the chart below.
I wanted to put out this update, not to boast about having a crystal ball (spoiler alert: I don’t), but to let you know we’re basically in uncharted territory now. We might experience some pullbacks here and there, and there's probably going to be a lot more volatility and unusual price action overall...
But I definitely don’t think gold’s ascent will stop here. Several factors are driving continued upward momentum—and these are just off the top of my head:
De-dollarization is picking up pace.
Unchecked government spending and soaring interest on $35.7 trillion in U.S. debt.
Central banks are stockpiling gold at rates we haven’t seen in 50 years.
The Fed is reverting to its old playbook of easy money.
Ongoing wars and extreme geopolitical tensions.
Kamala’s potential election as the 47th U.S. President.
That said, I get why some people might hesitate to buy at all-time highs. With everything that’s going on, I think not doing so would probably be a big mistake, but I understand the hesitation.
Massive Opportunity in Gold Miners
But here’s the thing—you don’t actually have to buy gold itself to get exposure. As I wrote in one of this week’s essays, even with gold’s sky-high performance, gold miners are still incredibly cheap right now. In fact, investing in a company whose revenue comes from mining gold probably makes more sense right now than it has in a long time. And you don’t even have to go with the riskier, non-producing companies... although those are dirt cheap right now.
I won’t rehash all the details here—you can catch up on that essay here. The main point is there’s a huge disconnect between gold mining stocks and the yellow metal itself. I call it the "golden value gap," and it’s probably the decade’s biggest opportunity in gold stocks.
Have a golden weekend!
Lau Vegys
https://m.youtube.com/watch?v=N6TkCLDcC7o&pp=ygUbc2F2b3kgYnJvd24gaGVsbGJvdW5kIHRyYWlu
Do you think we’re on it?