Why $2,500 Gold Could Be Just the Beginning
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Gold prices have hit a record high of $2,500 per ounce, but experts are saying this could just be the beginning. In this video, Taylor Kenney dives into why gold remains undervalued despite its soaring price. Discover how rising geopolitical tensions and a weakening US dollar are driving central banks to buy gold in record numbers, using it as a critical insurance policy against economic instability.
CHAPTERS:
0:00 Gold Prices Surge
1:49 Undervalued
3:20 Rate Cuts
4:45 Preparing
TRANSCRIPT FROM VIDEO:
00:00
Hi everyone, thank you for being here. At what gold price do you really start to worry about the state of our entire financial system? This week, gold prices shattered records, reaching over $2,500 an ounce, with momentum continuing to rise. But many are wondering why is this happening right now? What can this tell us about the current state of the economy? And how is it possible that with prices hitting new record highs, many experts are saying that gold is actually
00:30
undervalued. And most importantly, what does this mean for you? Let’s start with the why. Now, if you’re watching this video, there’s a good chance that you already understand that what is happening with gold looks more like an alarm bell for the current monetary system than anything else, while the majority of the population is completely ignorant to the realities of what is going on. Heightened geopolitical risk has created tremendous demand for safe haven.
00:58
assets of course, principally being gold. Gold is a safe haven asset, it’s the ultimate safe haven asset, because it is finite. There’s only so much of it, which means that it is insulated, unlike a fiat currency like the US dollar, from overprinting, from geopolitical tensions. In fact, historically, gold actually does well.
01:19
in times of crisis for that very reason. I don’t need to tell you that things are unstable, you already know that, and we can both safely assume that things are going to get a whole lot worse, which is why many experts are now saying that gold is actually undervalued despite the fact that it’s reaching these record high prices. So I saw an article yesterday that says, from Yahoo Finance, only a matter of time until gold reaches $3,000 strategist, but what’s interesting here again is the why.
01:49
behind it. The bottom line for gold is that it typically outperforms the S&P 500 when it’s at a severe discount, which is now when unemployment rises and the yield curve, which is steeply inverted, disinverts. Now this is coming from a Bloomberg expert and we’re going to break down exactly what he means by discounted.
02:11
unemployment rates and the inverted yield curve. Gold’s perceived value is actually much higher than its spot price, thanks to the current economic conditions we’re in. For example, if we take unemployment, which we know is on the rise, and in fact is probably even worse than what they’re telling us. I mean, I don’t know if you saw yesterday’s news that the last year’s job report was revised down by over 800,000. Just a simple miss there. But regardless, we know unemployment is on the rise. And if you assume it’s going to continue to rise, then you can assume
02:41
then investors’ appetite for risk will decline, and instead they will be seeking out safe assets such as gold. And the second thing he talks about here is the inverted yield curve, where short-term interest rates are higher.
02:55
than long-term interest rates, which historically has always been a recession indicator. Essentially, investors are betting on lower interest rates and a weaker economy. And what’s happening right now with the dollar? Well, next month in September, the Fed is expected to have a rate cut. And while that might signal good news to some, maybe someone’s stuck in a house and they’re trying to get out and they can’t wait for that rate cut, to many what this is signaling is a weaker.
03:20
US dollar because higher rates actually underpin the US dollar strength against other foreign currencies. But falling interest rates is actually dollar negative. Let me give you an example here. The European Central Bank dropped rates in June, but the United States didn’t. So the differential between the two is actually pretty wide. But if the United States also drops rates, suddenly the difference isn’t that great.
03:47
If you think about it this way, let’s say would you rather be making 5% or one or 2%, the demand for dollars as rates drop actually drops with it. This is also happening at a time when we’re moving into an election where both candidates have promised tremendous amounts of spending. So other central banks across the world, other countries cannot count on the United States to lay off the printing press, which of course devalues the dollar.
04:16
and creates higher risk for everyone. This is why central banks are buying gold in record numbers, driving up that price because they are looking for less risk and they wanna make sure that they have their insurance policy in place should something happen. The bottom line is that you cannot trust the US economy or the US dollar right now. I always tell people, look at what the central banks are doing, look at what the wealthy and the elites are doing, what do they know that we don’t? They are…
04:45
preparing, they are ensuring that they are ready because what’s happening now is only the tip of the iceberg. So if you believe that things are going to get worse, which I don’t know if you do, but I personally do, unfortunately, then now is the time to make sure you’re prepared outside of the system. That is the reason why gold prices are increasing. That is the reason why demand is going up is because a lot of smart people, a lot of wealthy people understand.
05:13
what is coming next. Thank you so much for being here. I appreciate you as always. Let me know your thoughts in the comments below. I’m Taylor Kenney with ITM Trading, your trusted source for all things gold, silver, and lifelong wealth protection. Until next time.
SOURCES:
https://www.cfr.org/backgrounder/dollar-worlds-reserve-currency
https://www.npr.org/2023/06/12/1181062016/dollar-reserve-currency-debt-ceiling-sanctions-china
https://www.cbsnews.com/news/biden-new-russia-sanctions-military/
https://www.npr.org/2024/06/13/nx-s1-5001925/russia-frozen-assets-ukraine-g7
https://www.youtube.com/shorts/LB7bIqixdRM
https://www.gold.org/goldhub/data/2024-central-bank-gold-reserves-survey
Chinese exports have replaced the EU as the lifeline of Russia’s economy
https://www.nytimes.com/2024/02/16/briefing/russian-sanctions.html
