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My Gold Outlook, 2018

By Charles Kubach, Mine-Engineer.Com
January 4, 2018

Well, 2017 was a so-so year for gold, with it bouncing around from $1,150 to $1,345. India is continuing their trend of lower per capita gold buying, while several wealthy Mid East countries are near the top, which is occupied by Hong Kong and its wealthy Chinese Capitalists. The production of gold, from mining and recycling, resulted in a slight surplus of metric tons of gold, as the supply slightly exceeded the demand.

Clouds on the horizon from Digital Products, such as Bitcoin and the copy digital promises have flourished lately, increasing in value 7000%, in some cases. However the question to ask is, "Is any digital number backed by absolutely nothing of value and existing only on exchange computers really worth anything"?

And they say the religious people are the only ones with faith. Digital currency holders must have most of the faith in the world, or the lowest brain capacity in the world. Time will tell, but until some substantial assets are backing digital "currencies", and it is administered by reputable, trustworthy institutions, it is truly nothing more than promises and absolutely nothing of value. As everyone knows any currency that inflates 7,200% in value in one year is great for those who bought at low prices, but it is most likely to return to reality before long, and loosing 50% of value in a day, week or month, will show it for what it is. A worthless number with a empty promise, administered by slick con artists.

Gold has been considered a valuable commodity since it was first discovered by tribes of humans, and for thousands of years has represented wealth in the vast array of societies that have come and gone in the annals of history. Now that is staying power, and it has proven value with it's golden luster, smooth finish and sultry attitude. And yes, gold has had it's share of con artists, claiming to have the mother lode to naive investors. Renowned American author, Mark Twain once said that "a gold mine was a hole in the ground, with a liar standing above it". Since he lived among the many gold rushes of the late 1800's, he saw many such con artists and readily recognized them. If Mark Twain were alive today he might say " Bitcoin is a promise of wealth with despair as it's payoff".

So, when the first digital product crashes, and wipes out the hopes of its holders, sanity will again return to the investment world, with the expensive lesson that value must be more than a promise. It must be something real, and something that truly has value, that can be sold and used to buy real currency, whether it be digital or otherwise.

The US Dollar used to be backed by gold, as it could be exchanged for gold of the same value at any time. After many years of proving itself as a reliable currency worldwide, people realized that the value of the United States was far greater than the value of all the gold in the world. So, no longer did it require gold for every dollar, as the faith and security of the country was behind every dollar printed. That took a 150 years or so, to arrive at that point.

Other factors that may affect the price of gold might be the improving global economies, which should bring a bit of inflation as the economies expand, which will make gold a good haven for inflated currencies. Then there is always the threat from a lunatic dictator, to commit a act of war against the most powerful country in the world, probably leading to their annihilation, and much turmoil, which would send gold soaring,. But all sane people hope this is not a factor.

Central banks continue to purchase and hold gold, as the table above shows the world central banks holdings of gold in metric tons. The USA has over 8,000 tons of gold backing its currency, the largest amount of any country, by far. Exchange Traded Funds (EFT's), the latest way to invest in gold hold around 3,000 tons of gold, and as more invest in them, the more gold they will purchase. The more affluent countries around the world buy gold jewelry, and as the economies improve in many countries, more will spend some of their growing income on gold jewelry. And the scientific uses of gold as the best conductor of electrons, is increasing for very high tech applications, where power is critical and heat is evil. Then there is the government intervention, injecting cash into their economies holding the cost of money to near zero, in hopes of providing capital for business to expand. This has reached it's end of life, in many cases, as further artificial stimulation will absolutely render their currencies to be worth $0, so most are phasing out these programs that outlived any usefulness.

All of the above bode well for gold in 2018, however my crystal ball is malfunctioning this year, but I think $1,500/ounce it is a realistic price for gold in 2018. It will probably bounce between $1,200 and $1,500 per ounce, and as global economies improve, go even higher.

So, until next time, may golden wishes and platinum dreams bring happiness and wealth in 2018.

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