Hello!
HAPPY EASTER! No doubt, many of us are thinking about the significance of this weekend as Jesus is risen! We at King are hopeful you had a blessed weekend with family and friends.
The first week of baseball is now behind us, Jon Rahm was victorious at the Masters, and since I’m a Dallas Mavs fan, I can’t help but mention a quick personal note of frustration about the Kyrie Irving/Luka Doncic connection…well, not connecting!
Anyway, let’s move on to some relevant market perspective…and this week it comes from Eric Rice, King’s Chief Growth Officer. I’m honored to recognize Eric and his brilliant callout on gold and market insights at the end of the newsletter.
One of my ex-Rangers Ownership partners and a Billion Dollar company builder, Toby Darden, texted me today and said (and I’m paraphrasing to keep the personal things out of his statement), ”I have been following a man who works with you….Eric Rice.
You have in Eric, one of the brightest financial forecasters (especially for energy) that I have heard in a long time!” WOW! What a great personal reference for Eric, so be sure and follow Eric on his podcast “The Critical Rice Theory” (only on telegram) and be sure to read his thoughts below.
On that high note about Eric and his market insights, allow me to add that the market is simply out of whack and upside down right now.
An article in the Wall Street Journal from last Monday headlined “Small Investors Sour on Stocks”. I’m NOT a stock picker, but some crazy things are going on in public companies.
Let’s see what Eric has to say about what’s going on!
Is Gold Near it’s All Time High?
Authored by Chief Growth Officer, Eric Rice
I normally focus on “black gold” (oil), the market and pricing, but today we are going to take a look at actual gold and what is happening in the markets.
Gold, the longest standing store of value in history, is about to touch it’s all-time high after over a decade of stagnant prices. To some this may come as a surprise, but not to us. With the shifting trends in the markets and the threat of the Dollar losing value, to us the price of gold is a baseline indicator of things to come.
So why is gold near it’s all time high?
Well, there are many reasons and most of them are obvious. Supply and demand drive commodity prices and the available gold in the market is shrinking daily. This is due to foreign central banks, who have been buying hundreds of metric tons for the last 2 years.
In case you missed Jay’s letter last week, a quick recap of BRICS nations is important context for this story on gold and the markets today.
The aforementioned central banks are comprised primarily of the banks from the BRICS nations (Brazil, Russia, India, China and South Africa). The BRICS nations formed in 2001 under a common goal of creating a competitor to the US Dollar as a global reserve currency.
In 2010 they strengthened their alliance to begin exploring the reduction in the overall global power of the US Dollar, and move to remove the Swift system and the primary driver for cross border payments.
Since 2010 the BRICS alliance had been thought of primarily as a conspiracy theory. But in recent years it has been shown to be a real concern to the overall global dominance of the US Dollar.
When Russia invaded Ukraine, the Biden administration immediately responded by applying the same old economic global bullying tactics the US has been using for decades…sanctions. As with all his policies thus far, Biden failed miserably. What he really did was wage war on the Dollar.
Since that time, the Russian ruble has increased in value, and they’ve seen economic growth because of these alliances with other BRICS nations. Currently Russia is selling their oil to India for Rupees, and African nations for gold, proving they can work outside of the Dollar system.
In the past two weeks, China has brokered deals between Saudi Arabia and Iran. They have purchased liquid natural gas from France in Chinese Yuan, and they’ve signed a trade agreement with Brazil to do business in the Yuan.
To add insult to injury for the Dollar, 29 other nations have either applied for BRICS or publicly stated that they will no longer do trade deals in the Dollar. This is and should be of great concern to every American, though it is getting little media coverage.
So let’s get back to Gold over the last two years. Recently gold has outperformed many asset classes in the market. Of course, supply and demand has played a huge role in pricing while the BRICS nations’ central banks buy up as much inventory as possible, but it’s not the primary driver.
The real purpose behind these banks buying up Gold may simply be to help them avoid sanctions in times of war. The other side of the world is trading in gold to free themselves from the use of the Dollar.
As a kicker, they have been talking frequently about creating a competitive currency that is backed by precious metals, primarily Gold. Though a metals backed currency is dismissed by many economists, I believe there is evidence in the market that this possibility must be seriously considered.
Next week we will take a more in-depth look into the happenings with the BRICS nations and the possibility of Gold-backed currencies. And we will also dive deeper into the relevant geopolitics and their impact on the markets.
But for now, take Gold seriously as a leading indicator that commodities could likely dominant as an asset class in the coming years. It is not a stretch to see that Gold is nearing an all-time high. Other commodities, particularly Oil, would stand to reason to follow with a run up to an all-time high as well.
Recommended Reads
While King and it’s partners appreciate higher oil prices, there are others who don’t. It’s always good to see all sides of such an important topic…
The Biggest Losers of $100 Oil
Barron’s published a more traditional perspective on why Gold prices are up. But there are some real nuggets (see what I did there, lol) embedded in this article with some hot links to some additional stories on Gold…
Gold Prices are Near All-Time Highs. 3 Reasons for the Rise.
Speaking of gold, there are some outstanding results beginning to come in regarding “black gold” in the current KOPX Program 4. If you are not in it, and you are accredited, it’s a good time to have a conversation. You can schedule a Zoom here.
