Gold bullion investment expert addressed audience at the Empire Club of Canada’s Annual Investment Outlook Luncheon
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Conditions are set for a market correction that could result in a massive increase in the price of gold bullion, according to expert Nick Barisheff.
The president and CEO of Bullion Asset Management Group addressed attendees at the Empire Club of Canada’s Annual Investment Outlook Luncheon last week in Toronto.
Barisheff believes a number of factors will lead investors back to the traditional safe haven of gold, which could increase the price eight-fold. Yesterday, it was priced at around $1,340 per ounce.
Factors include the relationship between the gold price and the US bank, which has been affected by rising US debt and billions of dollars in “naked short sales of COMEX gold” over the past five years.
He said: “To normalise the relationship between US debt and gold, gold should be $1,900 per ounce. When gold is deliberated from the paper price, the increase will surpass $10,000 per ounce. Most people find this incredulous.”
Barisheff highlighted the fact there is $294 trillion of gold financial assets consisting of equities, bonds and mortgages compared to $8.7 trillion of all the gold ever mined, with the latter set to decline by 76% by 2029. ETFs, he added, hold 42 tons of gold but this is “double counted because it has been leased and authorised from central banks and authorised for participants as counterparty claims against these holdings”.
He said: “The global financial system is experiencing a condition not seen since 1929 of a simultaneous triple bubble in stocks, bonds and real estate sitting on an unprecedented pile of $270 trillion of unpayable government debt. This, in addition to a very dangerous mound of over $600 trillion of derivatives, [means] conditions are set for a major market correction.”
This will result in a massive increase in the price of gold, he said, as investors turn to historically safe bullion. Investors back in the 1960s typically had 5% of their portfolios in gold; today, individuals have less than half of 1%.
He said: “If global investors reallocate this 5% of their financial assets to gold, that would be $14.7 trillion of increased demand trying to purchase less than $1.8 trillion of privately held gold.”
Barisheff also emphasised the importance of physical gold over “paperwork gold”, saying that Futures trading defeats the purpose of bullion because of the high risk of failure at the very time investors need the insurance provided by gold.
Meanwhile, Barisheff looked ahead to 2018 and highlighted the growing importance of the Shanghai Gold Exchange, where contracts are physically settled rather than traded in synthetic derivatives.
He said: “The most important influence in 2018 and beyond is the announcement made in 2017 that China will establish the gold-backed petro-yuan. This will allow the oil producers to sell oil to China in yuan and then exchange yuan into gold by the Shanghai Gold Exchange.
“The price of oil in yuan will have a huge impact on the exchange value of the yuan, the US dollar and correspondingly, the price of gold. Iran, Russia and Venezuela have already agreed to participate and we could soon see 500 million barrels a day traded in not US dollars, but in Chinese yuan.”
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