Currency expert, Alex Mashinsky, CEO of crypto firm Celsius Network says that whichever way the chips fall in the coming months, gold is an undisputed safe asset. Pointing out that the actions of central banks and the Federal Reserve have caused gold prices to rise since the onset of the coronavirus crisis, we could feasibly expect to see prices from $3000 to $10,000.
“After the Fed’s actions, we’ve seen a continuous increase in the price of gold. People are getting worried about the recovery and the Fed printing trillions of dollars. This is driving an increase in allocation towards gold in many portfolios. There’s a very high chance of a debasement of the U.S. dollar. And it’s not just about [losing value], it’s also about the U.S. dollar losing its power as the reserve currency of the world.
“The Fed is going to flood the market with at least ten trillion dollars because they keep saying that they will do whatever it takes. The central bank added more assets in one month than they did in over a hundred years. So ask yourself, how long can you do that before everyone else around the world loses trust in your currency? After all, it’s just paper. And accumulating a trillion dollars a year is definitely not something that is reversible. At some point, people will stop buying our treasuries, they’re going to stop lending to us.
“There are tens of trillions of dollars in the bond market that is yielding near all-time lows. The 10-year is half of one percent and the 30-year is at all-time lows. That is where the real earthquake hasn’t happened yet. This is where the mega bubble is going to burst. I’m not sure even the Fed has enough money to unravel this bubble when people actually stop using bonds. When this happens, a lot of those assets are going to run into gold.”
While Mashinksy says this scenario could lead to gold prices sitting in the several thousand dollars region, he also says that a second emergence of the coronavirus is likely, which would again favour gold. This underpins his argument that fiscal stimulus is a long-term benefit for gold, as additional economic packages could be needed.
“There is a one hundred percent certainty that we will have a re-occurrence of coronavirus in the United States before we get the vaccine [because] mass production of a vaccine is expected to be available only at the end of next year.”