Best-seeling author James Rickards warns that gold is poised to spike because of global political instability.
To be sure, gold rose early Monday as North Korea's latest nuclear test provoked the usual knee-jerk shift to safe havens.
"The bigger picture, the one I'm looking at, is that gold hit an interim low on Dec. 15 and it has been grinding higher ever since. It's one of the best performing assets of 2017,” Rickards said, according to TheStreet.com.
Rickards, who was the principal negotiator of the 1998 bailout of Long-Term Capital Management as the hedge fund’s general counsel, predicted gold could soar to $10,000 an ounce.
“People seem to have very short attention spans. I'm just looking down the road and you can see the war is coming,” the "Currency Wars" author said.
North Korea on Sunday conducted its sixth and most powerful nuclear test, which it said was of an advanced hydrogen bomb for a long-range missile, prompting the threat of a "massive" military response from the United States if it or its allies were threatened, Reuters reported.
Speaking outside the White House after meeting with President Donald Trump and his national security team, U.S. Defense Secretary Jim Mattis said Trump asked to be briefed on all available military options.
"Markets continue to treat each North Korean escalation as being the same as the previous instance, buying the yen, Swiss franc, treasuries and gold while selling the Aussie dollar - but not on a large scale," said Sean Callow, a senior forex strategist at Westpac.
"Assuming the worst on the Korean peninsula has not proven to be a winning trading strategy this year," he added. "Investors seem reluctant to price in anything more severe than trade sanctions, and the absence of another 'fire and fury' Trump tweet has helped encourage markets to respond warily."
Gold on Monday was up 0.8 percent at $1,336 an ounce, having risen to $1,339.47, its highest in nearly a year.
Tom Kendall, head of precious metals strategy at ICBC Standard Bank, saw potential for gold to rally further.
“We’ve got the geopolitics and we’ve also got a fairly benign interest rate environment. There’s still nothing threatening coming out of the Fed recently,” he told Reuters.
Gold has broken the $1,300 an ounce key resistance level that has held since October 2016.
Trump is likely going to push to impose harsh sanctions on Chinese banks that continue to provide a financial lifeline for North Korea. While sanctions have been imposed on small financial institutions already, the biggest banking connections remain large state-owned Chinese and Iranian Banks.
“If the president goes after the larger Chinese banks, there is a chance that the Chinese will both respond by selling large amount of its foreign reserve of U.S. dollars and by doing so weaken our currency,” says Andrew Packer, Newsmax’s editor of the Resolute Wealth Letter and author of a new gold book to be released in December, “Trump $5,000 Gold: How to Profit From Gold’s Next Explosive Rise!”
President Trump, according to Packer, “would love to further weaken the dollar versus the currencies of our biggest trading partners to reduce what he has called ‘massive trade imbalances.’”
Packer, also a Newsmax Finance Insider. insists: “When you consider both the likelihood of more downward pressure on the U.S. dollar resulting from the North Korean, Chinese, and U.S. political concerns, and the Federal Reserve’s sluggish action on raising interest rates, the upside for gold looks very likely.
“I’m expecting gold to rally and challenge the $1,500 resistance level sometime in 2018. And I wouldn’t be shocked by a run that brings it to $1,750 by the end of next year.”
(Newsmax wires services contributed to this report).
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