As many here know, I have advocated to own Gold for years. Not as an investment but rather as a hedge against the uncertainties of our times. These include global uncertainties as well as domestic ones involving our debasement of the USD. In tandem with that debasement is the never ending deficit spending and subsequently ever increasing National Debt. this is not a new condition so the warning signs and sirens have been blaring for anyone who looks. Owning Gold and I argue Silver too, is more than defensive. It is the bastion of any new system that would replace the existing Fiat currency world that is crumbling. You may think I am being hyperbolic but I am not.
The yellow metal has been real money for thousands of years and is seen as such and accepted as such in every country on Earth. That kind of ubiquity takes trust and confidence in it having universal value. It IS the primary element, made in the formation of stars, that is often called God's money. Indeed it is.
As Gold becomes loved again, and it is just getting started, the price in dollar and other fiat currencies, goes up. This not so much the value of Gold rising as it is the lowered value of the currencies used to buy it. That may take some adjustment in your thinking but less purchasing power for any currency requires more if it to buy the same weight of Gold. You see, Gold is valued by the amount of weight like grams, ounces, kilos etc. Today, one ounce of 24 kt Gold is priced at over $4,000 fist currency USD and similarly in other country's currencies all of which are fiat. If fiat currency is not a familiar term here is a good, if long, definition:
Fiat currency is government-issued money with no intrinsic value, such as U.S. dollars or euros, that is declared legal tender by a government. Its value comes from public trust in the issuing authority and the stability of the economy, rather than being backed by a physical commodity like gold or silver. Central banks manage the money supply and implement monetary policies to maintain the currency's value and ensure it functions as a reliable medium of exchange.
You will note that it is backed only by trust and confidence in the economic conditions in which it is issued. So what happens when these erode? They debase and become less trusted and therefore less valuable with less purchasing power and acceptance. This continues until its purchasing power is virtually exhausted and a new system gets implemented. You say, no way! I say yes. It has happened numerous times before and is almost systematic happening every 100 years or so. Previous to the USD being the world's so called reserve currency, the British Pound was king of cash. They were dethroned after bankrupting themselves fighting two world wars and the Brenton Woods accords ushered in the USD as the new crowned king of fiat currencies. The truth is that in 1947 the USD was still backed by Gold. That ended when President Nixon closed the Gold window and the US refused to honor the exchange of USDs for Gold. That was in effect a default but that language is rarely used to describe this watershed moment. Nixon's declaration saved the US Gold reserves which still exist unaudited in Fort Knox and other US Gov controlled vault facilities. Is it really there? Who knows, but they say it is. Following this end to the Gold backed USD, the currency was Fiat as described above and gradually lost its purchasing power. It is recorded as having lost 97% of its pre- Federal Reserve purchasing power. Yikes, and since we are now heavily burdened by unpayable debt it continues to lose more. The hedge against such debasement is Gold. Some might say Bitcoin, but I am not in that camp, tending to agree with Peter Schiff and others that Bitcoin is essentially a chain letter depending utterly on the next guy buying it at a higher and higher price, again in Fiat currency. Keep in mind that a power failure brought on by natural other man made disasters would prevent accessing all those useless digital tidbits. The point here is that bitcoin has no intrinsic value though the depiction is always a golden coin inferring it is digital Gold. It ain't, but it is digital. Try walking up to the trading hut with a string of numbers trying to buy a a new grass skirt. Good luck, because you'll be walking away naked. If you presented a gram of gold, which is instantly recognizable, you will walk away with an entire wardrobe and a butler to dress you. I might add that primitive Islanders used coconuts and other things like sea shells as money for hundreds if not thousands of years. These have more value than Bitcoin in terms of a use case and in that way are superior requiring no electricity to be presented and used as a medium of exchange.
So, am I gloating that Gold is now over $4000 USD per ounce. Yes and no. I am gratified that I have some and have been a proponent of others having some as a hedge to debased fiat currencies. The chickens have come home to roost as the saying goes. But it is not a good thing for society in general because currency collapses come with societal chaos and can wreak havoc on law and order and economic systems. The great unwashed are in for a world of hurt. Those who are “in the know” seem to always be prepared in advance and great wealth gets continued in the hands of the few. But wealth can also be created for some who, for whatever reason, where in sync with the goings on and bought and held Gold and as I insist, Silver.
Whether to agree or not, some things like gravity do not require your agreement to exercise their inexorable authenticity and authentic God created force of operation. It is a virtual certainty that the USD continues to lessen in its purchasing power and that has become more and more visible to the man on the street. Will that man buy Gold? Maybe. I sure hope so. But so many millions and even billions of Earth's population will not. Oddly enough, those in the Eastern and Asian parts of the world are much more in tune with Gold as money and on fact China's government, Communist regime, has encouraged their 1.4 billion Citizens to but Gold. India too where it is their traditional wealth store. Why the US and other Western nations use Fiat money and do not encourage their populace to buy Gold is found in their complete inability to spend within their means. When you collect $5 Trillion in taxes and spend $7 Trillion on crap, you go broke sooner or later and no one wants your dollars which equates to Bonds. The scales have tipped recently to Central Banks now holding the majority of their Reserves in Gold which upends the US Bond's previous reign. The time they are a changing sang Bob Dylan. Oh brother was he right!
Protect yourself. Protect your family and loved ones. Gold may correct but the long term trend is up up and away. Get your hands on some or be left holding the proverbial bag.
Best,
Donn Marier
DM-Your Own CFO