Gold to $3,000
An enormous breakout in gold is telling us something.
Dear readers,
Price is truth. Thursday’s $50 pop in the gold price has carried over in the opening trading hours of April in Asia. What is gold’s jump trying to tell us? It’s something quite serious. To think about gold’s place in the global financial system, we study the global trio of balance sheets and how they interact.
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Agenda
Holdings
Global balance sheet hedge
Price action
My thesis
Classic balance sheet hedge
At The Bitcoin Layer, we’ve written about the death of the dollar, specifically how the dollar is more king than ever when compared to other currencies. The euro and Chinese yuan are ages behind, and there is no gold-backed BRICS-formed currency in the works. China isn’t planning to back the yuan with gold either. But I do believe China is the ultimate reason gold is breaking out—more on that at the end.
First, let’s look at holdings. All major non-US, non-European nations are building reserves:
It’s easiest to think of gold as a balance sheet item. In the global economy, we can think of a trio of balance sheets interacting.