$64,000 per Ounce Gold?
No, that figure is not a typo. Is $64,000 an ounce gold truly plausible in today’s world? We believe the answer is yes. While that number is quite a figure, given some of the current events unfolding around the globe, the possibility of the gold price increasing many times over and doing so very rapidly is not at all far-fetched. In fact, given China’s voracious appetite for gold and increasing tensions between China and the U.S., gold could potentially see a truly historical spike in price.
How could the price of gold possibly rise to $64,000 an ounce?
In a recent Bloomberg Intelligence article, the authors discussed the potential for China to initiate a gold standard. Such a move, according to the article, would require the price of gold to trade for approximately 50 times its current value, or about $64,000 per ounce.
At current gold prices it would be impossible for the country to initiate such policy given the amount of gold that would be required to be held. A move to some type of gold standard would likely have to have some significant differences from the previous gold standard. The article went on to state “Any attempt probably would involve new technologies and depend on the ratio of what is backed.”
The mere discussion of such a move is very interesting given the recent climb of the Chinese Yuan among global currencies…
Obviously, having a currency that is backed by gold would attract foreign capital. Additional capital inflows into the currency could help it become the global reserve currency of choice.
According to another recent report by GoldCore, Chinese M1 money supply stands at approximately 33.64 trillion Yuan, which at current exchange rates is about $5.4 trillion.
Bloomberg estimates China’s gold reserves to be around 3150 tons, although some estimates put this figure significantly higher.
In order to put this into some perspective, to back $5.4 trillion worth of Yuan with 3150 tons of gold, the gold price would have to be valued around $48,600 per ounce.
It should be noted, however, that according to the Bloomberg report, there is no evidence that China seeks to adopt a traditional gold standard. That being said, even if the country were to partially back its currency with gold it would likely gain favor across the globe as a preferred reserve currency, especially when compared to the increasingly debased U.S. dollar. Think about it- would you rather hold paper the value of which is base don nothing more than the promise of a horribly indebted government (the US) or a currency which is backed by a physical asset that has always had significant global value?
Such a move by the Chinese could create quite the conundrum for the Federal Reserve…
This could potentially force the U.S. to follow suit, and in order for it to back the dollar with gold, the precious metal would have to trade at multiples of its current price…
Relations between the U.S. and China are strained to say the least. From what China considers U.S. meddling in the South China Sea, to other disagreements concerning various affairs in South East Asia, the prospects of an economic and currency war are real and considerable.
The GoldCore report then went on to state “However, there will be a tipping point where the advantage to be gained by badly impacting the dollar and positioning the Yuan as new reserve currency will be greater than the disadvantage suffered by a collapse in the value of the dollar.”
“The tipping point is closer than many believe.”
Now is the time to consider what a dollar collapse could do to your investments and financial future.
Further depreciation of the dollar has already been set in motion, and there will be no going back.
There are assets available for investment that may hedge against such a scenario. Hard assets like gold, silver and other precious metals.
These assets have stood the test of time as a reliable store of value and source of wealth protection. Isn’t it time you explored how physical gold or silver ownership may potentially benefit your portfolio?
For individual investors the answer is gold. At the end of the day gold stands high and true as the first and true currency and measure of wealth. With multiple storms brewing on the horizon, do you want to be in a paper-based canoe or a rock solid gold battleship? Gold offers the ultimate safe harbor and vehicle for wealth preservation.
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Please reach out to our precious metals executives with any questions that you might have about investing in gold and the process of setting up a Gold IRA. We are available and happy to assist.Tags: gold, gold investment, gold price