What is the gold price prediction in a monetary reset (our theorised Covid19 worst case scenario)? i.e. in the event that there are mass lay offs, bankruptcies, insolvencies and unrecoverable loans. In the event the markets crash? In case of such an event, the gold price will rocket. For this reason investment advisors recommend allocating a portion of your wealth to gold. As insurance.
Monetary theorist Jim Rickards has done the calculation of the gold price in the event of a market crash. Jim Rickards is an economist, tax specialist and lawyer. He was the general counsel of Long Term Capital Management. He is an advisor to the CIA on money war games. He is also commonly featured on Bloomberg and CNBC, and is the author of several books on the death of money, currency crises and monetary resets.
His assumptions and calculations are set out below
Gold Price Prediction Assumptions
Based on the following assumptions:
– In the event of a monetary reset
– Assuming the world returns to a gold standard
– Assuming 40% gold backed currency
– Combined M1 money supply of the world multiplied by 40%
– Divided by official central bank holdings of gold
Gold Price Prediction Calculation
This works out to be:
– (USD 24 trillion * 40%) divided by 33,000 tons
– Equals USD 10,000
– Which is approximately 566% increase from the current price of gold!
Which is how much the gold price went up in the last gold bull run
Want to know why gold is important and why Central Banks hoard it? Click here!
Using Gold as Insurance
Armed with this knowledge you can can calculate how much gold you need to protect yourself against a market crash.
Based on the following assumptions:
– The current price of gold at time of writing is $1,485.
– The target gold price in market crash is $10,000. This represents a 573% increase in the price of gold.
Doing the calculations, allocating 15-20% of your wealth to gold will protect you for an 80% drop in the rest of your wealth.
Want to learn more about using Gold as insurance? Simon Mikhailovich, the founder of The Bullion Reserve, explains more in this interview.
