Will breaks down why gold could hit $2,500, tracing its moves through the 2008 crisis, COVID, and today's stimulus. Loose monetary policy has historically lifted gold, while rate hikes pull it down. He sees the recent dip from $1,980 to $1,800 as a buying opportunity, with the Fed unlikely to hike soon.
Okay, hi, well, how's it going?
Good, thanks, Anthony, very well.
Good. Just a quick catch-up. Obviously a lot of people talking about gold at the moment, and given the fact that you've been kind of invested both physically and emotionally in gold for such a long period of time, it'd be really good to hear what your thoughts are at these price levels.
Is Anthony Cheung: Yeah. Thank you, mate. Well, listen, first of all, everyone that's done an Amplify program over the last couple of years has probably been bored to death with me talking about the reasons why gold could be supported. And it's really interesting to see how it's playing out. Obviously, I didn't know that COVID would happen, but what was going to be the case was that at some point there'd be another recession. And as interest rates were already so incredibly low, the only way that central banks could try and fight that recession was increasing money supply, printing money, as we've seen with the trillions of dollars that have been created. But I think that gold's actually quite a simple beast to understand. And if you look at the chart here, you've got 4 main points over the last few years. So we had the financial crisis of 2008, where we actually sold off from $1,000 to about $750. Before the central bank response. So here's the central bank response: stocks higher, gold through the roof. The only thing that made gold move lower was the fact that interest rates in the US might start to tighten. Okay, so we had this huge rally higher based on this loose monetary policy, and then when that started to get taken away— and actually the first interest rate hike was 2015— you can see gold moved from near 2,000 back down to 1,000. Obviously, a lot was going on during this period, but nothing major until the COVID crisis. And actually, just like the financial crisis during COVID the first reaction was for gold to sell off from about $1,650 to $1,450, which was definitely a heart in my mouth time for gold positions. And now we fired higher. And it's really interesting to look at what's happening because If you think about it, the reason behind this push higher in 2009, 2010 was loose monetary policy. We have that on steroids now. I think it's about— the US was a total of under a trillion here, wasn't it? About $800 billion being printed or so. Now we have trillions being printed, not just by the US, but not just by central banks, but also by governments. So yeah, I mean, gold's been gold supported, and I'm really glad that this is come through. It's been a really difficult hold for me. As you know, we've been talking about this for a couple of years. But if you look at the main levels here, Anthony, look, once we passed 1,000, can you see, once we got through that 1,000 level pop, we went all the way up to about 1,200, 1,250. So there's a good, there's a good 20% pop on that extension. And if you go to a shorter term chart, for example, you can see just this morning, you know, we've moved from 1980, all the way down to test 1900. Look how behavioral gold is.
Yeah, yeah, that's absolutely—
as you were saying, yeah, spot on to the 1900 handle. And I think for anyone touching this, you know, it has to be more of a long-term play. We could go all the way back down to 1800. I mean, we were only there 2 weeks ago, yet this upward trend is still there. This upward trend is still very valid if we're trading at around 1800 again. But you can imagine a lot of people touching this just for the first time, and they're just not being able to, to wear that $200 sell-off. We're actually in the, in the grand scheme of things, you know, this is, this is what happens. We, we had it here. Can you see when we try to break, uh, you know, $1,200 for the first time, we move lower. Gold does oscillate around these levels before then firing higher. Um, yeah. And it's an interesting time. There's so much out there supporting it. Medium term. The only thing that moved gold lower, just to reiterate, 2011 onwards was the taper tantrum, which means interest rates starting to move higher in the US. As you know, we've got the Fed tomorrow, and I think the likelihood of the Fed talking about interest rates going up in the near term is zero. So gold can remain supported.
Cool, good stuff. Well, uh, thanks for your insight, Will.
