Massive money printing poses a grave currency debasement risk, which could push safe-haven assets like gold to unprecedented highs, Celsius Network, founder, and CEO Alex Mashinsky told Kitco News.
Gold prices began to climb this spring after the Federal Reserve announced it will do whatever it takes to get the U.S. economy back on track, Mashinsky said last week. “After the Fed’s actions, we’ve seen a continuous increase in the price of gold. People are getting worried about the recovery and the Fed printing trillions of dollars. This is driving an increase in allocation towards gold in many portfolios,” he noted.
Mashinsky sees gold climbing to $3,000 an ounce by the end of next year but admits that even more gains are possible depending on how bad the currency debasement gets.
One of the biggest risks facing the U.S. economy is the U.S. dollar one day losing its status as the world’s reserve currency. “The biggest risk is us losing the dollar as a reserve currency of the planet because, since 2008, the U.S. has not produced any real GDP. All the GDP we get since 2008 was with borrowed dollars … In the long-term, you must pay the piper. You have to either debase the currency or you have to create a new product that allows your earnings to pay back the debt that you’ve accumulated,” Mashinsky noted.
Currently, there is no real competition for the U.S. dollar and many investors feel that they are diversified by owning different types of stocks. Still, if they are all denominated in U.S. dollars, then they are not diversified at all, the CEO explained.
Unlimited money printing could eventually catch up with the U.S. and have a devastating impact on the economy.
Bond market bubble?
One key thing to pay attention to with this is the bond market — “the biggest bubble that hasn’t burst yet,” according to Mashinsky
If the bubble bursts, investors will rush into gold as they wait to see whether the Federal Reserve could stabilize the situation. “If that happens, a lot of those assets are going to run into gold,” Mashinsky said. “That is the fork in the road that we’re facing. If you can see in the future, you would know if gold is going to be $10,000 or only $3,000.”
Three horses racing to replace the U.S. dollar:
Currently, there are three horses in the race to replace the U.S. dollar as the world’s reserve currency, Mashinsky pointed out.
“One of them is a digital reserve currency, which is like what China or the United States is effectively trying to create. The second one is the corporate version of that, which is Libra of JP Morgan coin. And the third one is the open public blockchain, represented by the Bitcoin,” he said.
This has happened in the past, which only makes this race more competitive.
“Over the last 2,000 years, every empire thought the same thing from the Roman Empire to the Byzantine empire, to the British, to the French, to the Portuguese. And they learn that when you debase your currency, sooner or later, everybody loses trust. And when they lose trust in your currency, they switch to something else,” Mashinsky stated.
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