The coronavirus related economic crisis is now in full swing and by now most everyone realizes this not just your average garden variety recession. We are seeing events all the time now in various markets that are described as historic in nature and some described as "never seen before in history". It is now very clear that the foundations of the monetary and financial system we have known for a long time are being shaken to the core and no one really knows how this is going to end or what direction things will eventually take. In an environment like this, all kinds of ideas and predictions emerge for the future that only a short time ago would have been viewed as far fetched and extreme.
Below I am documenting just a couple of articles to illustrate this point. I have no idea if the prediction for gold made in one of these in these articles will pan out or if the extreme proposal (universal income for all paid for by just printing money at the central bank) described in one of the articles will ever be seriously considered. But I do know that things like this will be looked at by a lot more people now and taken more seriously be a larger portion of the public as the general public perception grows that our present system and institutions are failing.
----------------------------------------------------------------------------------------------------------------------From Kitco, Bank of America predicts Gold Will Go to $3,000 Per Ounce
"Bank of America commodity analysts just keep getting more bullish on gold as the weeks go by.
The bank said in a report last week that gold ’s technical momentum could drive prices to an all-time high this year; in a new report published Tuesday, analysts have officially increased their bullish outlook, saying that gold prices could hit $3,000 within 18 months, a 50% increase from its previous forecast."
. . . . .
"Economists at Bank of America have warned that the Federal Reserve’s balance sheet as a percentage of GDP could rise 20% to 40% this year. According to reports last week, the Federal Reserve’s balance sheet hit a record high of $6.42 trillion, up more than 50% from levels reported during the first week of March.
The analysts noted that the Federal Reserve: “Can’t print gold.”
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"According to an April 6 article on CNBC.com, Spain is slated to become the first country in Europe to introduce a universal basic income (UBI) on a long-term basis. Spain’s Minister for Economic Affairs has announced plans to roll out a UBI “as soon as possible,” with the goal of providing a nationwide basic wage that supports citizens “forever.” Guy Standing, a research professor at the University of London, told CNBC that there was no prospect of a global economic revival without a universal basic income. “It’s almost a no-brainer,” he said. “We are going to have some sort of basic income system sooner or later ….”
“Where will the government find the money?” is no longer a valid objection to providing an economic safety net for the people. The government can find the money in the same place it just found more than $5 trillion for Wall Street and Corporate America: the central bank can print it."
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My added comments: I underlined the last sentences of both articles above to illustrate an interesting irony. Both of the these articles are suggesting ideas or events related to a failure of our existing system. They both perhaps indicate that what we have now is failing.
However, as we know, the ideas on how to deal with a failure of our present system and what proposals should be adopted to "fix things" are often as if people come from different planets. These two articles do a decent job of illustrating that reality so I am posting them here for readers to compare and contrast. As far as I know, there is really no comprehensive consensus on any plan to reform or reset our present monetary system at this time that anyone thinks could actually be agreed to and implemented. Also, as most everyone knows, virtually every proposal offered in the United States is immediately politicized and everyone gears up for battle to try and obtain political advantage with no hope of any kind for compromise that leads to agreement on major reforms. Just the two articles above illustrate ideas (using gold as a solution vs. endless central bank money creation passed out to the public) that would lead to never ending partisan political fighting if anyone tried to get either passed into law. That's just the the reality of where we are these days.
Added note: If you think this new gold price forecast from Bank of America (hardly known far and wide as big gold advocates) sounds pretty high, you will really be surprised by forecasts by some others such as Jim Rickards. In one recent interview Jim says gold will be $5,000 per ounce by next year and eventually ten times the current price over time. None of this suggests much confidence that our present system is going to make it through this time unscathed. In the next 2-3 months, it will become clearer and clearer just how badly shaken our present system really is. Anyone who has not taken any steps to prepare for a worst case scenario by now may have waited too long. However, as always, time will give us the answer. But this time we may not have to wait years for that answer.
As much as anyone thinks they have prepared for the worst case scenario, no one can be fully prepared. As you have seen this week, people are protesting stay at home orders after just 3-4 weeks. There is always some supply you haven't planned to have enough of, whether that is cash, gold, toilet paper, masks, gasoline, disinfectant, ammo, or something else we haven't thought of for the next crisis.
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