3 Major Reasons Why Gold Could SkyrocketAfter the U.S. presidential election the markets have been responding in surprising directions. Stock markets are up, and the dollar is high, on expectations that President-Elect Trump could fuel economic growth, however, these market sentiments are bound to be short-lived. The price of gold could gain some major momentum considering these 3 very important factors:
1. Sharia Law Will Soon Spur $3 Trillion of New Gold Investors into the Market
Sharia Law is the religious law that governs members of Islamic faith, and that includes finances. By the end of the year, a new law will go into effect that will allow Muslims to buy gold for personal investment for the first time ever. This is huge because before this point, Muslims have been allowed to own gold in the form of jewelry or trinkets under Sharia Law, but forbidden to hold gold as an investment that would increase in value over time. All this is about to change, as the World Gold Council is working with the Accounting and Auditing Organization for Islamic Financial Institutions to enable Muslims to own gold as a commodity.
The bottom line: Muslims account for 1.6 billion of the world’s population, including 112 billionaires and the royal Saudi family and wealthy sheikhs. Standard & Poor estimates that this could funnel $3 trillion into the gold market—a significant amount that would be sure to send gold prices soaring.
2. The Chinese Gold Exchange Will Reset Gold Prices Based on Physical Bullion
As we’ve discussed at length in previous newsletters and blog posts, China is a formidable player in the gold market, and this year established their own Gold Exchange, which rivals the two main exchanges in London and New York. China is already the top importer, exporter, and consumer of gold—and has plans to seriously change the way that gold is bought and sold. On the New York and London Exchanges, gold has been priced for the past 40 years based on gold futures contracts—not actual physical gold. Only 1 in 252 contracts are based on real physical bullion, which artificially suppresses the price.
The bottom line: On the Shanghai Gold Exchange, anyone buying gold futures will be required to deposit the equivalent of physical gold, meaning that every trade on the Shanghai fix will be backed by physical precious metal, putting the ratio at 1:1 instead of 252:1. Based on the law of supply and demand and finite amounts of gold available, the result should be an astronomical rise in prices.
3. Analysts Strongly Predict a Trump Presidency Will Increase National Debt