Gold’s Rise in Geopolitical Tensions

We've now seen gold not only move over a hundred dollars since May 6th but an additional $43 just yesterday. Tensions with Iran and looming financial uncertainty threaten possible economic decline for the U.S. economy, meaning that gold could rise even more. Join Coy Wells and Patrick Brunson as they discuss these issues and their possible outcomes in today's episode of Market Insights.

Gold's Rise in Geopolitical Tensions – Video Transcription

Coy Wells: 00:00        

Today, we're here with Mr. Patrick Brunson and we're going to talk about the increase in gold that just took place in the last 24 hours. We've now seen gold not only move over a hundred dollars since May 6th, but we've now seen gold in, less than 24 hours, move about $43 and why it's doing that and what it means for the near future. The other issue that we're going to talk about, and Mr. Brunson is going to describe, is the announcement by Jerome Powell yesterday, by keeping interest rates flat and then discussion of possibly lowering interest rates in the near future. Mr. Brunson, what's your opinion on why gold just jumped and why interest rates are playing such an intricate role in the movement of gold right now?

Patrick Brunson: 00:38      

Well, if you remember back in 2013 when the price of gold collapsed, they were talking about how things were getting better. They were talking about the possibility of raising interest rates at the time, which was very big for the dollar and, basically, the price of gold collapsed. So, we've gotten to the point where here we are six years later, the price of gold hasn't done anything. They haven't sold off treasury bonds to the tune of what they said they were going to do. If we're going to normalize, interest rates seem to be anywhere from 7% to 10%. We got to two and a half points last year. Since then, the Federal Reserve has completely reversed their stance on interest rate hikes, and quite frankly that means gold should go back up to where it was before they made those statements.

Coy Wells: 01:23    

I know that most every major news station yesterday was talking about the inverted yield curve, but for those who understand simple economics, when we raise interest rates, it's one of the ways that allows the government to draw down on the national debt of the country.

Patrick Brunson: 01:34    

Correct.

Coy Wells: 01:34             

In 2018, if folks remember, the stock market dropped dramatically; 600 points and beyond almost on every single instance we rose interest rates. So there's a lot of information of us being on the cusp of major recession. I would like you to speak a little bit about 2000, the war then. 2008, right before we were in a recession, having a war then and now of course Iran shooting down one of our drones yesterday. How big of a role does that play into gold market and of course the U.S. Economy?

Patrick Brunson: 02:01      

The problem is whenever we go to war, countries go into massive amounts of debt to try and fund those wars. That's why they sell bonds. The bottom line is whenever we go to war, it requires governments to spend massive amounts of money, more money than they spend on anything, which requires central banks to print that money. Which is why a lot of times, war can actually result in an overall recession or even a global depression.

Coy Wells: 02:25     

We know that Iran also stated last weekend that they're looking at pulling out of the U.S. Dollar and then going to the Euro. We also saw information that Russia was also possibly planning that as well. If we go to war with Iran, what would be the involvement possibly with China and Russia, if that were to take place?

Patrick Brunson: 02:42        

Well, Russia already stated this morning, that if the United States retaliates, that they're probably going to get involved. They stated that the U.S. should practice “restraint” against retaliation against Iran. So if we do retaliate, Russia is probably going to get involved because Iran is an ally of theirs, which in turn could get China involved who's an ally of Russia's.

Coy Wells: 03:03     

Right. So right now we're less than $20 away from $1,400 an ounce.

Patrick Brunson: 03:08      

Less than 10 actually, it's been up a little bit in the last couple minutes.

Coy Wells: 03:08              

The threshold for Gold was around 1360, for us to break over 1360 and break it significantly, that means that the chances of pushing beyond 1400 could actually happen today, if we see an escalation with the Iran deal.

Patrick Brunson: 03:24         

If we cross over the psychological level of 1400, I think it's very possible. Many experts believe that we will see 1500 very, very shortly.

Coy Wells: 03:33          

If you think about gold and you compare that to stocks, I want you to think about all the stock that you have out there, how many stocks since May till now have increased $100 and for those who understand how important gold was during the recession of 2008, gold went from around $800 an ounce to around $1,920 an ounce during that recession time-frame. Right now, it is absolutely imperative for anyone who has money sitting in a stock market and every major news station station talking about a recession to get involved and to get involved now.

Patrick Brunson: 04:02          

To get more information on this topic, you can get U.S. Money Reserve's latest report: Gold 101. It has a lot of really good detailed information on gold and wealth protection. So to get your copy, click on the link below or call the number on your screen. If you like the information today, please like and share this video. And if you're watching us from YouTube, please subscribe so that you don't miss a single episode. I'm U.S. Money Reserve's, Patrick Brunson,

Coy Wells: 04:27          

and I'm Coy Wells. And as always, thank you for watching Market Insights.