The Fed Can’t Print Gold

The mainstream just went super-bullish on gold.

Bank of America raised its 18-month price target to $3,000 per ounce in a report titled, “The Fed Can’t Print Gold.”

BoA was already pretty bullish on the yellow metal, forecasting a record $2,000 per ounce within the next year-and-a-half.  According to a report released by the bank upping that projection, the vast amount of fiscal and monetary stimulus unleashed by central banks globally will likely drive gold higher. The report said, “financial repression is back on an extraordinary scale.”

As economic output contracts sharply, fiscal outlays surge, and central bank balance sheets double, fiat currencies could come under pressure. Investors will aim for gold.”

Bank of America called gold “the ultimate store of value.”

We’re already seeing significant demand in the gold market with shortages on many bullion products and gold holdings in ETFs hitting record levels.

Central banks around the world are creating trillions of dollars out of thin air. In March alone, G-7 central banks bought up nearly $1.4 trillion of assets. As the BoA report noted, governments and central banks are also socializing risk through their actions.

As central banks rush to expand their balance sheets and backstop the economy, a lot of risks could effectively be socialized, boosting the appeal of gold.”

Back in March, Peter Schiff predicted a rush to gold, saying that “the dollar is cooked.”

Peter said that with the central bank and government response to the coronavirus, hyperinflation has gone from being the worst-case scenario to the most likely scenario. If that comes to pass, gold will go through the stratosphere.

Right now, the demand for dollars and dollar-denominated assets remains high. But how long will that last once the printing press gets fired up?

“What the Federal Reserve has basically told the world is if you’re an owner of US Treasury bonds, you need to sell them to us because we’re going to buy the entire bond market,” Peter said in an interview with Fox Business.

Peter thinks investors will eventually start dumping dollars.

Nobody can hold dollars. Nobody can hold any bonds denominated in dollars. This is now like a game of musical chairs where nobody wants to get caught with dollars when the music stops playing.”

And when that happens, what will they buy?

Gold.

What else are they going to do? I mean, what are they going to use as an asset? They’re not going to just swap dollars for euros or swap dollars for yen. They’re going to just buy gold.”