3 Nov 2016
by E.B. Tucker, Casey Research:
We are on the cusp of a powerful bull market in gold. It could be the biggest in a century.
This won’t be like the gold bull market of the 1970s, when inflation drove gold from $35 an ounce to $800 an ounce. Or the bull market last decade that sent gold from $250 to $1,900.
This time it’s different.
Sure, central banks around the world are creating new supplies of money as fast as their politician friends can spend it…but that’s not the biggest push for gold.
You see, right now, there are three major catalysts that could send gold to the moon:
1) A new “gold law”…
You won’t hear about this catalyst in the financial media…but it’s urgent.
On December 31, 2016, the floodgates could open for 1.6 billion “gold bugs”…32 central banks…and 112 billionaires.
I’m talking about a new gold standard for Islamic law.
Right now, the World Gold Council is working with the Accounting and Auditing Organization for Islamic Financial Institutions, which sets the standards for Islamic financial law, in order to create an entirely new standard for gold trading.
This is huge. In short, we could be looking at $3 trillion piling into the gold market later this year.
You see, Islamic law bans certain “immoral” trades…things like alcohol and tobacco stocks. It also includes gold…even though gold holds a special place in Islamic culture.
So until now, gold has been “off-limits” to Muslims for the past 42 years.
In other words, one-quarter of the world’s population—among it the world’s most enthusiastic gold buyers—has hardly touched a single gold investment.
But that could all change…
This new standard would allow close to a quarter of the world’s population to trade gold investments just like any other.
When that happens, all of that pent-up demand will be unleashed.
The next catalyst will come from China…
2) China has taken control of pricing gold…
China is the world’s top importer, producer, and consumer of gold.
Earlier this year, China opened the Shanghai Gold Exchange. It’s a “shot across the bow” to the world that they want to dominate the global gold market.
If estimates are right, China’s gold reserves are almost double that of every other major country combined.
And obviously they think they should set the price. Not banks in the West.
China wants a price set on actual physical gold. Not on paper contracts, like futures.
This is truly game-changing. For the last 40 years, the Libor and COMEX exchanges priced gold based on futures contracts.
Right now, there are 252 ounces of gold claims per ounce of deliverable gold.
China will change that when it becomes the center of gold trading.
And every single trade on the Shanghai Gold Exchange will be backed by the equivalent amount of physical gold.
In combination with the new Islamic law, gold has a legitimate shot at rising to levels we haven’t seen in our lifetime. In fact, the Chinese are quietly opening yuan “clearing banks” in Middle Eastern countries…including a new yuan bank in Dubai—the financial hub of the Middle East.
But there’s another catalyst that ties everything together…
3) “Peak gold” has arrived…
Peak gold is similar to the concept of peak oil. The idea is that, at some point, the easy-to-extract oil will be gone. Exploration and development costs will soar. And production will decline over time.
The thing is, this can be applied to all finite resources. None more so than gold.
Right now in the gold sector, the production of gold is rapidly shrinking…just as demand is soaring.
This has caused exploration to plummet in recent years, simply because the cost isn’t worth it.
The experts are saying “peak gold” is here. Last year, Goldman Sachs warned that there’s “only 20 years of known mineable gold reserves.”
The “known” part is key.
That’s because the costs of mining exploration have surged 10-fold, even as new discoveries become few and far between. This has caused exploration to plummet in recent years, simply because the cost isn’t worth it.
BlackRock, the world’s largest asset manager, agrees we’ve reached “peak gold.” It predicts gold production will decline by 20% every year moving forward, even with higher prices.
So in a nutshell, you’ve got…
• The shrinking supply of gold…
• The unprecedented and instant surge of demand from 1.6 billion Muslims worldwide…
• And the new Shanghai Gold Exchange that could return physical gold back to the gold markets…
The bottom line is this “trifecta” of gold events is creating a once-in-a-lifetime setup for gold investors.
One that will see the price of gold explode higher.
All of these things have already sent gold into the early stages of a new bull market.
But the entire thing will give way by December 31, when the floodgates open for gold. You’ll want to make sure you’re not sitting on the sidelines.
The time to take advantage is now.
Read more at original source: