by Nick Giambruno, International Man:
Last week, I laid out four reasons for why this gold rally will be bigger than anything we’ve ever seen.
I explained how central banks are buying up piles of gold… how China is using the metal to remove its dependence on the U.S. dollar… and why the Fed’s shifting strategy is bullish for the sector.
Today, I’d like to dive deeper into what’s going to trigger this revival…
No. 5: Takeover Frenzy in the Gold Mining Industry
2019 is on track to be a record-breaking year for gold mergers and acquisitions (M&A).
The world’s largest mining companies are pouring billions of dollars into mergers and acquisitions.
Three blockbuster deals contributed to this result:
- Newmont Mining completed a $10 billion takeover of Goldcorp on April 18.
- Barrick Gold acquired Randgold Resources in a $6 billion transaction that closed on January 1.
- Barrick Gold has also announced a joint venture with Newmont after a hostile bid from Barrick failed. (Barrick and Newmont are the top two gold-producing companies in the world.) The joint venture in Nevada will create the largest gold-producing complex in the world.
What these mega deals prove is that the biggest companies in gold mining think gold and gold stocks are cheap.
They show a preference to grow by buying out other companies rather than discovering and developing new resources.
If this trend continues, 2019 will go down as a record-breaking year for gold M&As.
It’s another major tailwind for gold.
No. 6: President Trump Is Pro-Gold
President Trump is a big fan of gold.
For one, he’s made a killing as a gold investor. He’s called investing in gold “easier than the construction business.”
But Trump’s affinity for gold goes much deeper. He once said:
The legacy of gold as a precious commodity has transcended to become a viable currency and an accepted universal monetary standard. Central Banks around the world are holding gold as a reserve asset.
And Trump is a fan of the gold standard… in other words, the re-monetization of gold.
While running for president, he said:
Bringing back the gold standard would be very hard to do, but boy, would it be wonderful. We’d have a standard on which to base our money.
And he’s acting on his pro-gold instincts in a big way. Let me explain…
Trump has been able to wield more influence over the Federal Reserve than any other president since the Fed was created in 1913.
He’s had the chance to fill five out of the seven seats on the Board of Governors of the Federal Reserve.
In other words, Trump gets to stack over 70% of the whole Fed board with people of his choosing.
And so far, he’s nominated several pro-gold candidates, including Herman Cain and Stephen Moore. They’re both on record as supporting a gold standard.
For example, in 2012, when Cain was running for president, he wrote an editorial for The Wall Street Journal titled “We Need a Dollar as Good as Gold.” He wrote:
Gold is kryptonite to big-spending politicians. It is to the moochers and looters in government what sunlight and garlic are to vampires.
Cain and Moore have since withdrawn their nominations, but one replacement is widely suspected to be Judy Shelton, who is also an advocate of the gold standard.
Regardless, the fact that Trump nominated them in the first place shows he is willing to act on his pro-gold instincts.
Here’s the bottom line…
Having a U.S. president who favors gold and is looking to stack the Fed with pro-gold people is unprecedented in recent history. It’s a positive development for gold – and the trend of gold’s re-monetization.
But gold is going to get a boost, no matter which party is in power…
No. 7: Socialism Is on the Rise
Socialism is on the rise in the U.S. And it’s about to be entrenched in U.S. politics.
A recent poll from the Victims of Communism Memorial Foundation, a D.C.-based nonprofit, showed that one in two millennials now favors socialism and communism over capitalism.
It’s why Bernie Sanders, Elizabeth Warren, Kamala Harris, Alexandria Ocasio-Cortez (AOC), and other socialists are skyrocketing in popularity.
This is no small problem.
Millennials are now the largest demographic group in America. And sometime this year, they are expected to surpass baby boomers as the nation’s largest living adult generation.
In other words, demographics alone guarantee more socialism ahead. And as we’ve seen again and again, when asked, “How are you going to pay for this?” socialists have the same answer: “Tax the rich!”
Simple arithmetic shows that even if the rich were taxed to the limit, it wouldn’t put a dent in the bills for the socialists’ government programs. But to this, the socialists respond: “We’ll just print money!”
In comes Modern Monetary Theory (MMT). It’s the latest buzzword coming out of Washington, D.C.
Contrary to its name, MMT is neither new nor “modern.” And adding the word “theory” to something doesn’t make it scientific or credible.
MMT is the same economic quackery that’s brought misery to Argentina, Venezuela, Zimbabwe, and countless other places. Now, left-leaning U.S. economists, politicians, and policy wonks are taking it seriously, too. They see it as a sort of “QE for the people.”
For example, AOC and Stephanie Kelton, Bernie Sanders’ former chief economic adviser, are leading advocates of MMT.
In short, America’s embrace of socialism will lead to more money-printing and currency debasement, just as it has everywhere else it’s been tried.
But this time, it won’t be the Argentine peso or the Venezuelan bolívar that is debased. It will be the U.S. dollar… the world’s premier reserve currency.
Gold is the primary competitor for the U.S. dollar’s top role. And as the American socialists inflate the value of the dollar away, it will make gold all that more attractive.
That’s why this trend will be a big positive for the re-monetization of gold.
No. 8: Gold-Backed Cryptos – A Monetary Revolution
The last catalyst for gold is cryptocurrencies backed by gold.
There are dozens of gold-backed cryptos sprouting up.