Nothing bulls up gold prices faster and further than reckless money-printing. Or so the common wisdom goes.
But if that statement was true, shouldn’t gold be $5,000 per ounce?
Think about it…
Over the past 10 years, the Federal Reserve, European Central Bank, Bank of Japan, and Bank of England have collectively “printed” more than $11.8 trillion.
They’ve increased the world’s money supply by 14%.
And if money-printing did boost gold’s price, surely gold must’ve been the best-performing asset of the last decade.
Yet it hasn’t.
That crown belongs to bitcoin and its stunning 1.4 billion percent return.
Well, gold must have beaten stocks then, right? Um… actually, no. Stocks are up 220%.
In fact, every asset class other than bonds has outperformed gold over the past
Surely, gold must’ve kept pace with inflation, though. After all, that’s gold’s No. 1 claim to fame—a way to hedge against inflation.
Unfortunately for gold bugs, that just hasn’t been true. Since 1980, gold’s annual average return is 1.74% per year, while the average inflation rate is 3.1%.
So why on earth should anyone buy gold?
Well, as a hedge against the world’s fiat system collapsing, gold makes sense. That’s why we recommend holding up to a 5% allocation of precious metals.
If the world really does go to hell in a handbasket, that 5% allocation could end up becoming more valuable than the other 95% of your investment assets.
That’s the power of gold during a crisis. But outside of a societal meltdown, does it still make sense to own gold?
The answer is yes—but only under certain circumstances…
A Massive Move Higher Ahead
Under a specific condition, gold transforms from a stodgy performance killer to a rocket ship of fabulous wealth creation.
The last three times we saw this condition, gold rose as much as 12%, 14%, and 24% a year later. And gold stocks did even better… The best-performing ones were up as much as 178%, 829%, and 925%, respectively.
I’m telling you about this today because last week, the exact condition that preceded gold’s 12%, 14%, and 24% runs triggered again.
It’s started a countdown on what could be the beginning of the biggest bull market in gold since the 47% bull run of 2011. It took gold from a low of $1,309 to a high of $1,923.
And it all has to do with something called negative real rates.
The real rate is the interest rate return you receive on the 10-year government bond minus the current inflation rate.
And last Tuesday, the 10-year Treasury dipped to a low yield of 1.99%. The annual inflation rate is projected at 2%. So investors are receiving a negative return when accounting for inflation.
Now, why are negative rates good for gold? It has to do with something called opportunity cost.
Gold pays no interest. So if you buy gold instead of bonds, you forgo the interest you would’ve received on the bonds.
That loss of income is the opportunity cost. But when real rates go negative, the opportunity cost disappears.
All of a sudden, it makes much more sense to own gold versus bonds because there’s no longer any opportunity cost.
That causes central banks and pension funds to make huge shifts in their portfolio allocations from bonds to gold.
It also explains why we’ve seen central bank gold-buying at a near 50-year high. And why we’ve seen investing luminaries such as Paul Tudor Jones, David Einhorn, and George Soros all get long gold.
Now, real rates have been bouncing between negative and flat. That means the fuse is lit… But this rocket ship won’t take off until real rates go sharply negative.
Here’s why we think that’s about to happen…
A New “Golden” Age
It all has to do with the U.S.-China trade war.
When you slap a projected $250 billion in tariffs on incoming goods, it’s only a matter of time before those tariffs start showing up as higher prices.
Tie that in with a booming U.S. economy and the tightest labor market I’ve seen in my lifetime, and the stage is set for explosive wage and consumer goods inflation.
The combination of surging inflation and low interest rates will cause a sharp increase in negative rates.
And faced with losing 1–2% per year holding government bonds… pension funds, central banks, and professional investors of every ilk will go full-tilt into gold.
Under this scenario, gold could easily trade at $2,500 per ounce. And this price action will ignite a gold stock rally unlike anything we’ve seen since the early 2000s.
So how do we play it?
Well, I’ll be the first to admit I’m no expert on gold. But I am an expert on unearthing new trends.
I’m also quite good at finding unique ways to profit from markets.
And that’s why I want you to be among the first to know I’ve discovered a unique strategy you can use in the gold market. Under certain rare circumstances, it can turn $1,272 into $100,000 or more.
If you’ve got at least $25,000 to devote to this strategy, I think it can make you a millionaire over the next 12 months.
And what’s best about this approach is that if I am totally wrong on gold, you’ll still make an average of $1,200 on every trade.
I can’t go through all the details in this article. So if you’re interested in finding out more, click here to automatically sign up for my special event on Friday at 1 p.m. ET. I’ll walk you through the entire strategy then.
I won’t hold anything back. I’ll tell you exactly what the strategy is and how you can start putting it to work right now.
You’ll learn how you can make more money in the next 12 months than you’ve ever made in your entire lifetime of traditional investing.
Let the Game Come to You!
Editor, Palm Beach Daily
P.S. There’s no telling how long this opportunity will last before gold stocks start going nuts to the upside. So if you have even a glimmer of interest in finding out how you could make $1 million (or more) over the next 12 months, sign up for my Friday webinar automatically right here.