After nearly six years of 0% interest rates, the U.S. economy is hooked on the heroin of easy money. It can’t even tolerate a modest reduction in the Fed’s balance sheet and 2.5% interest rates, still far below historical averages. In other words, this monetary tightening cycle is over. The next move is a return to QE and 0%, and perhaps negative, interest rates. These moves would, of course, weaken the dollar and be good for gold.
The stars are aligning for gold to break out and start climbing back to its all-time highs. Whether it’s central banks increasing their gold purchases, China and Russia looking to replace the dollar with gold, or the Federal Reserve giving up on monetary tightening, everything is set for a record bull run for gold. Now’s the time for investors to get into the gold game if they haven’t already.