Gold seems to be in a good position for a powerful pump that might push its price to record highs in 2023 and beyond, as reported by US Funds.
Higher gold prices
As you are aware, I have been researching and writing about the precious metals market for a very long time. At the moment, I believe certain special catalysts could lead to higher gold prices. It could be time to think about adjusting your exposure if you have either too little or none at all.
Just three possible catalysts are listed here.
Emergence Of A Multipolar World And Rapid Dedollarization
I’ll begin with what I believe to be the biggest risk that could be beneficial for gold prices: de-dollarization.
In last week’s commentary, I wrote about the end of the petrodollar and the possible emergence of a multipolar world, with the U.S. on one side and China on the other.
The purple line shows the combined economies of G7 nations (Canada, France, Germany, Italy, Japan, the U.K. and the U.S.) as a share of global GDP, in purchasing parity terms.
The green line shows the same, but for BRICS countries (Brazil, Russia, India, China and South Africa).
Today, for the first time, the leading developed countries contribute less to global GDP than the leading emerging countries.
Increased share of commodities
That may be set to change with the rise of a multipolar world in which half of all commodities are traded in U.S. dollars, the other half in another currency—the Chinese yuan, perhaps, or a BRICS currency of some kind, or a digital currency such as Bitcoin.
An increasing share of commodities is already being settled in non-dollar currencies.
This week, China settled a liquid natural gas (LNG) trade with France in yuan for the first time as the Asian giant seeks to expand its economic influence around the world.
Some economists believe the time is right for a major competitor to the dollar to step up.
Gold would be a direct beneficiary of de-dollarization since it’s priced in the greenback.
Gold is trading at or near all-time highs in several currencies right now, including the British pound, Japanese yen, Indian rupee and Australian dollar, and it would likely be hitting new highs in USD terms as well were the dollar to be devalued.
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Source: US Funds
