Gold prices have continued their year-end surge this week, climbing $200 an ounce since early November. It’s almost as if the gold market was watching what is going on in Washington.
No doubt it is. What is going on there? We’ll update you, but first, here are a few forecasts for 2023.
Gold Prices in 2023
The price of gold could soar to $4,000 in the new year. That’s just one call for higher gold prices in 2023. It comes from the Chief Investment Officer of Singapore-based Swiss Asia Capital. Juerg Kiener told CNBC that the threat of recession and interest rate hikes mean there is a good chance the gold market will see a major move in 2023.
“It’s not going to be just 10% or 20%,” but a move that will “really make new highs.”
There are others. In 2023, gold will slice through the double top near $2,075 as if it wasn’t there and hurtle to at least $3,000 next year, said Ole Hansen, head of commodity strategy for Saxo, a Danish bank with $85 billion in assets.
“2023 is the year that the market finally discovers that inflation is set to remain ablaze for the foreseeable future,” he said. “Fed policy tightening and quantitative tightening drives a new snag in U.S. treasury markets that forces new sneaky ‘measures’ to contain treasury market volatility that really amount to new de facto quantitative easing.”
Supply shortages are behind Goldman Sachs Group’s forecast for commodity prices to jump 43% in 2023. Sachs is predicting that commodities will be the best-performing assets in the new year. Its scarcity narrative finds support in precious metals circles, and not only in the U.S. Mint’s woeful inability to meet market demand. With the rush to safe havens driven by inflation and the Ukraine war, the Austrian Mint said it is “unable to keep up with demand” for gold coins. Gerhard Starsich, the mint’s chief executive, said, “Right now, we could sell three times as many as we are able to produce.”
“Gold appears poised to be a top commodity performer in 2023 if the world enters a recession.” That’s the view of Bloomberg Intelligence senior macro strategist Mike McGlone. His outlook is based on an expectation of central banks pivoting to easing in the face of global deflation.
Federal Spending and U.S. Debt
Future monetary conditions are determined by today’s spending and debt. So, on entering 2023, we note what happened to the U.S. national debt in 2022. We are ending the year with a federal debt of $31.4 trillion dollars. The year began with the federal debt at $29.5 trillion.
Ten years ago, entering 2013, the national debt was $16.4 trillion. So, it has come close to doubling in 10 years. Even so, the U.S. money supply (M2, right) has more than doubled in that time.
Washington is a strange place by any reckoning. Last year, the Biden administration proposed that any money going in or out of your business or personal accounts be reported to the Treasury Department for its inspection.
Yet as this year came to an end, Biden signed a $1.7 trillion spending bill that ran 4,155 pages—a bill that members of Congress could not possibly have read. So, the administration would like to have a peek at your personal affairs, which may amount to as little as $600, but its own affairs are a different matter as it rushes through trillions of dollars of spending without due diligence.
The easy passage of the omnibus bill shows there isn’t much of a constituency to rein in spending.
Ron Paul says the bill “increases government debt, forcing the Federal Reserve to monetize more debt, leading to more price inflation.” And that is ample justification for expectations of higher gold prices.
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