Gerald Celente: "The world is going cashless"

Virtual currencies are not going away anytime soon, despite attempts by governments to get a grip on this market. That's what trend watcher Gerald Celente said in an interview with Kitco. He notes that cash payments are declining in Asia, as people use mobile phone apps more often.

"The world is going cashless, people don't trust currencies anymore. This is a new paradigm. The world is going digital and these digital coins are going to gain popularity because people are losing faith in fiat money. They make jokes about the virtual coins, because they would not be backed by anything. But how big are the debts now? $220 trillion worldwide what banks have created? The virtual currencies are the gold of the populist generation."

You are one of the few who is positive about both virtual coins and gold.

"Absolutely, they both have a place. We see the next financial crisis coming and everyone knows that, you will see people fleeing into safe havens and that is gold and virtual currencies. You can already see that when there are problems in certain countries. People then flee to virtual currencies and gold. Once again, the crypto currencies are the gold of the new generation of millennials. It's easy to use.

Of course, governments will try to tackle it, that should be clear. But how hard they tackle it remains to be seen. Look at South Korea, but also at China. There, they want to restrict the 'mining' of virtual currencies. And two-thirds of all virtual currencies are mined in China. Thus, it does not have the solid and physical aspect that gold has. And that's why gold still remains the ultimate safe haven. But in a time of crisis, people will sit down at their computers and buy virtual currencies."

How long do you think the rally in stocks can last?

"It depends on how quickly interest rates are raised. The ECB has announced that it wants to reduce its monetary easing. What monetary easing? Giving money to your friends? Look at that big South African company that the ECB bought bonds from? Now they want to phase out the stimulus. The only thing that has kept the market going has been cheap money. Look at mortgage applications in the United States, they had fallen sharply. The moment interest rates start to rise, this market goes down. We now see that the dollar is falling because the ECB wants to taper its stimulus. But this is only temporary."

Gold has made a good start to the year, do you think that trend will continue?

"It all depends on the dollar. If interest rates rise too quickly, you will see the dollar strengthen and gold fall. Keep watching all the numbers that are being released. As soon as interest rates rise, the housing market goes down and so does the economy. Let's say they raise interest rates by three notches this year, that's not even a percentage point. So we continue to see solid gold price as the $1,250 per troy ounce level has not been broken.

We see a positive outlook for gold if it breaks above $1,400, a level we haven't seen in years. It's still in that bandwidth. But we don't see any major downside risk either. What will that be, maybe $100 to $150 per troy ounce? That's nothing. There will only be a breakout above $1,400 and then it could be a Bitcoin-like rally towards $2,000."