2023 Will Be Gold’s Time to Shine
All of the major currencies have formed important bottoms against the U.S. dollar in the past three months. For the majority of 2022, the strength of the U.S. economy, compared with Europe’s catastrophic problems and China’s communistic power grab that destroyed wealth throughout Asia, was the big winner of the year, but it also CRASHED the most bulletproof portfolio allocation in the world, the 60/40 mix of stocks and bonds.
Inflation drove stocks and bonds prices lower; the best way I can describe 2022 is a year of extreme dwindling of the wealth effect for Wall Street and high-level employees, at the same time as those who purchased homes in 2021 saw their valuation come down into orbit.
For now, this is not a recession of the lower-income classes and the middle class, who are definitely feeling the pain of inflation, but are still able to combat it with steady income.
The jobs market will not weaken substantially, in our view, as it took so much energy to convince people to go back to work, so we feel businesses would rather negotiate hours, terms and other flexibilities, before actually firing the entry-level workers.
The same cannot be said for high-level employees, who I feel are going to get one heck of a head smack, because their compensation was tied to the stock issuance of the bull market and that IS OVER.
This means that in 2023, we will continue to see more stalemate and slowness in the real estate market, as buyers and sellers cannot seem to agree on these current levels of funding costs. We will also continue to see more layoffs at the highest levels of big tech companies, but it won’t be a classic recession that sends millions of people to the unemployment ranks.
After the worst year for the 60/40 portfolio in 100 years and the 6th worst year for bonds in the past 322 years, Wall Street isn’t really ready to get back on the horse in 2023. Wealth Research Group still views the current landscape as a bear market.
The major differences between 2022 and 2023 are the following:
- Dollar index has peaked.
- Worst of the bear market is behind us.
- World disillusioned with China; don’t expect it to modernize and westernize.
In our view, this means that in the first half of 2023, we will see peak bear panic and, at some point, a bottom.
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Because neither stocks nor bonds are cheap, and the dollar has peaked, GOLD STANDS SUPREME.
It’s hard to find a better set up for gold than the one that’s shaping up, especially if Russia and the Ukraine start talking truce, as the war is turning too costly for both NATO and Russia.
A strong EUR is a major catalyst for gold to rally.
The markets have a way of frustrating investors by not doing what is priced in.
We think China, with its current riots, understands that it must keep re-opening or risk civil unrest.
China is critical in this 2023 theme, as it makes the case for strong EU/China recovery, while the U.S. experiences negative GDP growth, a perfect time for gold to soar.
Our resolve remains ultra-bullish.
Gold will hit $2,000 in 2023.
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