In a recent interview on Soar Financially, Michael Howell, president of CrossBorder Capital, delivered a series of striking predictions, forecasting a looming liquidity crisis and a potential surge in gold prices to $3,600 per ounce. His analysis, featured in the interview dissects the complex interplay of global finance, revealing a system strained by US policy shifts, Chinese monetary adjustments, and the possibility of a gold-centered monetary reset.
"Money moves markets," Howell asserts, emphasizing the recent volatility driven by the slowdown in US stimulus and China's efforts to stabilize its currency. "We've got to watch this space very carefully to see whether the Federal Reserve will start to move away from a QT and towards a QE. I suspect they will," he predicts, signaling a potential policy reversal.
He also highlights the US Treasury's "secret stimulus," particularly the issuance of short-term bills, as a form of liquidity injection. "On our Reckoning the money Runs Out in US money markets around July of this year" Howell warns, suggesting a potential liquidity crunch. Simultaneously, "It looks as if the Chinese are beginning to add stimulus to their markets," he observes, indicating a possible shift in China's monetary policy.
A key element of Howell's analysis is his prediction of a significant gold price surge. He argues that a joint US and Chinese revaluation of gold reserves could propel prices to $3,600 per ounce. "Gold taking America off gold it's putting America back on some form of loose gold standard," he suggests, hinting at a potential global monetary shift. He proposes that China might devalue the Yuan against gold, rather than solely against the US dollar.
"If the US allowed the gold price to revalue they'd get a whole lot of win-win situations," he states, outlining potential benefits for the US Treasury. "If you look at us debt the outstanding stock since year 2000 today compared with year 2000 the US debt stock I think I'm correct in saying is about 9 and a half or 9.6 times bigger so huge eyering you know jump how much has the gold price gone up since that time answer curiously 9.6 times" Howell explains the direct relationship between US debt and Gold price.
Howell also raises concerns about the physical gold market. "There is a lot more physical delivery coming out of that Futures Market," he observes, noting unusual activity in COMEX futures. He cites reports of silver delivery delays and difficulties in transporting gold bullion from the Bank of England, suggesting a potential physical imbalance.
"There's something else kind of going on here isn't there which we should we just don't know but there's a physical imbalance in the market somehow and that's telling you that you've just got to own gold in some form because I don't understand what's going on there" Howell admits.
Regarding the Yen carry trade, Howell downplays its significance compared to the broader forces at play. "My view has been that the Yen carry trade over the last let's say two years is not the force it was," he states, emphasizing the importance of monitoring global liquidity. "We live in a world of global liquidity not just us liquidity" Howell reminds viewers.
Given these uncertainties, Howell advises investors to consider allocating a portion of their portfolios to real assets, particularly gold. "Family offices in particular institutions generally have got to think very carefully about how they custody their assets," he warns. "You want things that are in the ground that are not going to go away by gold," he recommends, highlighting the enduring value of tangible assets. Howell's analysis, presented in a recent interview, offers a compelling perspective on the current economic landscape, underscoring the need for vigilance and adaptability in a rapidly changing financial world.
Watch the full interview:
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