$2,000 Gold & $50 Silver Quite Likely This Year – Here’s Why

Written by Egon von Greyerz of Gold Switzerland.

Gold is in a hurry and is unlikely to wait for investors to acquire it at anywhere near these prices. We could now see a quick move to $1,400 and if gold doesn’t stay too long at that level, the acceleration is likely to continue towards the previous high of $1,900 [and go even as high as $2,000/ozt. That being said,] silver will move twice as fast as gold [and could well reach] $50 in 2016. [Here’s why:]

Desperate measures by the ECB

The ECB confirmed yesterday that they are extremely concerned about the European economy as well as the fragile banking system. They lowered the negative rate to 0.4% and increased Q.E. by more than the market expected. I am quite certain that this is still just the beginning of the stimulus required to “save” Europe but,

However many trillions that Draghi throws at the bankrupt banks and European economies, it will make no difference. It is just not possible to solve a problem by the same means that caused it in the first place.

Adding debt to excessive debt will just make the final collapse that much bigger.

The ECB is not the only bank which will print money. All major central banks, including the Fed, will join the ECB in more Q.E. and more negative rates until the world drowns in worthless money.

Technical picture for gold

There are now many who believe that the technical picture for gold is bearish, especially due to the big net short position of the commercial traders. Conventional wisdom says that the commercials are never wrong. Well, maybe this time it is only conventional without the wisdom, because the likelihood is that the commercials will soon have to bail out of their shorts and, if that is the case, gold will surge even faster.

Based on what we see, the fundamental and technical factors for gold are now more bullish than they have been during the whole of this bull market which started in 1999.

Since the beginning of the year gold has moved up 20-25% in most currencies. In some of the weaker currencies the move has been even faster like in Argentine Pesos where we have seen a 40% move in 2016 and 9,000% in this century. We are likely to see bigger moves than that also in all western currencies including the dollar.

As currencies continue to weaken, gold will accelerate until we reach global money printing on a massive scale and hyperinflation. Desperate governments and central bankers are guaranteed to make a final attempt to save the world by printing unlimited amounts of money. They will of course fail which means that after the hyperinflationary period there will be an implosion of most assets fuelled by the credit bubbles as well as of major parts of the financial system.