March 29 this year, came the final phase of the implementation of the new rules of the Bank for International Settlements. Some experts believe that gold money status return should put an end to the omnipotence of the dollar. They predicted that by December the US currency may fall to 40%, and at the beginning of next year, finally to lose its value.
Three events that shook the world of gold
Starting from 1879, the US monetary system was based on the so-called "gold standard" that would tie the amount of paper money supply to the size of the gold reserves of the country, and $ 20 at any time could be exchanged for an ounce of the precious metal.
It took 55 years, and in 1934. US President Franklin D. Roosevelt approved the "Law on the gold reserve." According to this document, the private ownership of gold was declared illegal, and all the precious metal to be sold by the US Treasury. A year later, when all the gold was transferred from private ownership into the hands of the state, Roosevelt raised its price by 70% - to $ 35 per troy ounce, which gave him the opportunity to reprint the appropriate amount of paper money.
The next four decades, the price of gold remained stable, holding around $ 35, while in the early 70's other president - Richard Nixon, has not taken a decision to opt out of "gold standard". This is completely untied the hands of the government, allowing the printing endless amounts fiatnoy currency and gold prices, which has ceased to be money - grow exponentially.
And this spring, of 2019, the year the media spread the news about another, revolutionary, event - March 29 came the final phase of the implementation of the new rules, according to which the yellow metal again officially becomes the same first-class asset as cash bills and government bonds.
The rules adopted by the Bank for International Settlements (BIS) and was named "standard Basel III» (at the place of location of the BIS - g.Bazel, Switzerland), allowed some experts say that if the gold is returned his monetary status, it should be money №1 , ousted from the market of unsecured US dollar. Because the obligation to exchange banknotes for precious metals is now laid down not in the US Treasury, and directly to the banks, they should have started actively buying gold to maintain stability during the collapse of the dollar system. According to the forecasts of experts, by December, the US currency could fall by about 40%, and at the beginning of next year, finally to lose its meaning.
Fantasy or reality: 155 000 USD per ounce?
- And what happened on March 29? - This question is addressed to leading analyst of the brokerage company NordFX John Gordon (John Gordon).
- And that's what - he points to the chart. - Instead of having to fly to the sky, just a day before the gold price has lost more than eight percent!
In my opinion, to speak of the death of the dollar is clearly premature. It should be borne in mind that, although the Bank for International Settlements and brings together more than 60 central banks of various countries, its documents are advisory rather than mandatory. Furthermore, some sources say that the decision on the revaluation of gold and the date of the introduction of this rule was not adopted at the general meeting of the BIS, and a narrow circle of the larger regulators. This is the US Federal Reserve, the ECB, the Bundesbank and the Bank of England and France. And such major importers of gold, such as China, India, Russia or Japan is not present.
To gold again became a full money - continues the analyst NordFX - need to establish the gold parity, ie fixed its content, at least in the world's leading currencies.
Давайте произведем простой расчет. Сейчас цена золота составляет $1280 за унцию, или около $41 за грамм. А теперь посчитаем, сколько будет стоить золото, если установить паритет между долларовой массой и золотым запасом США. Итак, по данным на 2018г., золотой запас США составляет 8133,5 тонн, а долларовая масса, включая банковские вклады, – около $40 трлн. Делим одно на другое и получаем, что цена одного грамма золота должна равняться $5000, или $155,5 тыс за тройскую унцию. То есть, в 120 раз больше, чем сегодня.
Государственный долг США составляет более $22 трлн., и даже представить сложно, что произойдет, если хотя бы часть кредиторов потребует обменять свои фиатные деньги на реальное золото.
I think that, in spite of their primitive - sums up John Gordon - these calculations clearly show that a return to the days of the sesquicentennial ago, when every dollar, pound, ruble, or brand were secured by gold reserves of the country, it is hardly possible.
What they say experts
The London Bullion Market Association members (London Bullion Market Association, LBMA) conducted a survey of 30 analysts, asking them to give a forecast for the price of gold in 2019. If we average their opinions, then we can talk about the modest growth of only 1.8%. However, two-thirds of respondents believe that at some point during the year, the value of this precious metal may reach or even exceed $ 1400 per ounce.
The most optimistic proved Nagao Eddie (Eddie Nagao) from Sumitomo, name the price in 1475 dollars. According to him, gold is one of the privileged assets among institutional and private investors, as well as the probability of recession is growing in the United States.
As for the pessimists, there is the first line took Adam Williams (Adam Williams) from Fastmarkets MB (Metal Bulletin). His scenario envisages a decline below $ 1,200. According to the "bears", gold has been a decisive factor for investors in November 2018 - February 2019g.g. But in the case of the conclusion of trade deals between the US and China, the demand for safe-haven assets, including gold, will fall quickly, and the price will go down.
If we talk about a long-term forecast, the interest is the model constructed Harry Wagner (Gary S. Wagner), analyst and producer of a daily bulletin "Gold forecast» ( «The Gold Forecast»). According to his calculations, the last major bullish wave began in late 2015, after the correction of up to $ 1040 and suggests that gold could retest the record highs of 2011, reaching in 2020 the price of $ 2070-2085 per ounce.
Roman Butko, NordFX
Disclaimer: These materials are not a recommendation to invest or guidance on working in the financial markets and are purely exploratory in nature. Trading on the financial markets is risky and can lead to complete loss of funds contributed.