Tag Archives: Gold

Will Gold Reach Unthinkable Heights? by Egon Von Greyerz

If the world’s governments and central banks continue to create unthinkable amounts of fiat debt instruments, gold’s price as measured against those instruments could well reach unthinkable heights. From Egon Von Greyerz at goldswitzerland.com:

It serves no purpose to hold gold.

Why should anyone hold gold when it has lost value against most other assets since 2009. At the end of this article, I will tell you when you must not hold gold and why I think gold will reach new highs shortly.

Making money is a cinch in today’s stock markets so why do I need gold?

For the investors who have managed to combine a good portion of luck with modest investment skills, they could have made 2,000X their money since 1997 on Apple or 2,170X on Amazon, also since 1997.

So $10,000 invested in both Apple and Amazon in 1997 would today be worth a neat $40 million.

BITCOIN IS UP 470,000X

And what about Bitcoin? If you spent $10,000 on Bitcoin in 2010 at 10 cents, you would today have 100,000 BTCs worth $4.7 billion. If you did, you hopefully haven’t lost your key.

But to rely solely on electronic entries on a computer or memory stick is clearly a very inferior form of wealth preservation.

Also, hindsight is a wonderful investment method and the most exact of all sciences.

Yet, you didn’t need to be an expert stock picker to make money in recent decades.

If you for example spent $10,000 on the Nasdaq in 2009, you would today have over $140,000 and that without selecting one single stock.

But by using 2009 as starting point, you will have conveniently forgotten that you had before that lost 80% on the Nasdaq since 2000.

So we can always prove the ultimate performance by choosing the right starting point.

GOLD – WORST ASSET CLASS SINCE 2011 AND BEST SINCE 1999

When gold antagonists want to disprove gold’s virtues, they choose the 1980 top as $850 as starting point. They then deride gold investors that it took 28 years before that level was reached again. They conveniently forgot to mention that gold reached new highs between1971 and 1980, going up 24X.

Stock investors could also point out that they have outperformed gold by 200% since 2011. But they forget to mention that since 1999 the Dow has lost 60% against gold (excluding dividends).

Again, this shows is that you can always prove the investment performance by picking a suitable starting point.

Still, it is an undeniable fact that gold has been the best asset class in this century.

Continue reading→

End Of The US Empire: Orwell’s 1984 ‘Newspeak’ & Dirt Cheap Gold, by Egon von Greyerz

The fate of an empire’s currency generally mirrors the general fate of the empire. From Egon von Greyerz at goldswitzerland.com:

The final phase of Empires normally ends with the same signals whether it was 2000 years ago in Rome or  today in the US.

One of the first signs is losing wars together with excessive debts, deficits, devaluations and decadence  The US being defeated and hurriedly fleeing from Afghanistan in a few days clearly signifies the end of the US empire.

The mighty US military has in the last few decades conducted disastrous wars against very small countries with no big armies or weaponry. Vietnam, Iraq, Libya and Afghanistan come to mind but there are many more as we show below.

Brown’s University has just made a study of the US cost of wars since 9/11. They arrive at a staggering $8 trillion and the loss of 900,000 lives .

So in the last 20 years, the US has spent $8 trillion or 40% of annual GDP on conducting totally unsuccessful wars. The report also states that even after the exodus from Afghanistan the US is still involved in wars in over 80 countries.

Current extent of the US empire

US CURRENT WAR ACTIVITY

The cost of being involved in some kind of war activity in 85 countries will continue to cost the dying US empire dearly for decades to come.

Continue reading→

Four Unreported Signs Paper Money is Dying, by Matthew Piepenburg

Any so-called asset whose value, based on historical precedent, is destined for zero is therefore destined to die. From Matthew Piepenburg at goldswitzerland.com:

Below, we look at four deliberately ignored reasons why extreme liquidity is drowning paper money.

Reason 1: The Taper Debate May Not be a Debate at All

Here, we look past the taper headlines and ask a simple question: Would a Fed “tapering” of QE really matter?

As we’ve written elsewhere, the Great Taper Debate is less of a debate than it is a pundit circus, forever fueling now classic yet complimentary debates on inflation vs. deflation, gold vs. the dollar and Fed-speak vs. honesty.

Of course, such topics, including the great “taper,” are all critical issues worthy of opposing views and somber discussions.

The world needs open, transparent and respectful (as opposed to tyrannical) debate, now more than ever.

If the Fed, for example, were to taper money printing, it’s logical to assume (and argue) that this would mean falling bonds, rising rates, deflationary forces, a stronger dollar and massive headwinds for risk assets like stocks and real estate.

But for many who are not otherwise deeply ensconced into the weeds of Wall Street (i.e., normal, smart and conscientious investors), what they may not know is this: The Fed has other tricks up its liquidity sleeve than just “QE.”

Stated otherwise, the taper fears as well as taper debate may not be as central to the central bank debate as one might think.

Why?

Continue reading→

Why Big Government Statists Despise Gold, by MN Gordon

Statists and other government types hate any form of money they can’t debase. From MN Gordon at economicprism.com:

Did you get a 5.4 percent raise this year?

If you answered no, then your income is being systematically diminished by the federal government’s coordinated policies of dollar debasement.

You see, according to the Bureau of Labor Statistics, consumer prices increased 5.4 percent over the last 12 months.  So if your income didn’t increase by a commensurate 5.4 percent, then you are earning less than you were just one year ago.

The fact is price inflation acts as a hidden tax.  It’s the government’s underhanded way to increase spending without overtly increasing taxes.  Yet the tax still takes place, as the dollars in your biweekly paycheck become worth less and less.

The primary culprit of rising prices is the over issuance of federal reserve notes by the Treasury via deficit spending.  This debt based money enters the economy through government transfer payments and other spending programs.  There, it competes with the existing stock of money to buy goods and services.  Prices rise, accordingly.

Through the first 10 months of Washington’s fiscal year, which ends on September 30, the federal government has run a budget deficit of 2.54 trillion.  Of this, $800 billion – or about a third – of this debt was purchased by the Federal Reserve with credit created from this air.  If you recall, since July 2020, the Fed has been buying $80 billion of Treasuries per month.

The failure of these dollar debasement policies to support a balanced and healthy economy is grossly evident.  Asset prices have been inflating for over a decade.  At the same time, wages have generally stagnated.  This has resulted in a massive wealth gap.

Still, for the control freak central planners, operating within the monetary constraints of a stable money supply and the fiscal constraints of a balanced budget are out of the question…

Continue reading→

A Look Back at Nixon’s Infamous Monetary Decision, by Antonius Acquinas

Fifty years ago this month President Nixon stopped the dollar from being convertible to gold for anyone. The consequences have been monumentally tragic. From Antonius Acquinas at antoniusacquinas.com:

A half century ago one of the most disastrous monetary decisions in U.S. history was committed by Richard Nixon.  In a television address, the president declared that the nation would no longer redeem internationally dollars for gold.  Since the dollar was the world’s reserve currency, Nixon’s closing of the “Gold Window” put the world on an irredeemable paper monetary standard.

The ramifications of the act continue to this very day.  America’s current financial mess, budget deficits, the reoccurring booms and busts, the decline of living standards (particularly the middle class), all have their genesis with Nixon’s infamous decision in August, 1971.

Abandoning the last vestiges of the gold standard was the culmination of a long-term goal of the banksters, politicians, financial elites, and deceitful economists.  The first step was the establishment of the Federal Reserve in 1913 whose primary purpose was to allow its member banks to inflate the money supply without fearing the consequences – bank failures/panics, bank runs, recessions/depressions.  The Fed could, and still does, through the control of the money supply enrich itself, the government, and its aligned financial elites at the expense of the public at large. Continue reading→

The Dollar’s Final Crash Down A Golden Matterhorn, by Egon von Greyerz

Produce enough of anything and you can drive i to worthlessness. That’s particularly easy with fiat currencies, and governments have done it throughout history. From Egon von Greyerz at goldswitzerland.com:

Was Richard Nixon a real gold friend who understood the futility of tying a weakening dollar to gold which is the only currency that has survived in history?

So was Nixon actually the instigator of the movement to FreeGold?

I doubt it. He was just another desperate leader who was running out of real money and needed to create unlimited amounts of fiat money. Although his fatal decision to close the gold window was clearly the beginning of the end of the current monetary system.

But although the decision was fatal, Nixon was clearly not personally responsible. What the world saw in August 1971 was just another desperate leader who realised that he couldn’t stick to the monetary or fiscal disciplines necessary to maintain a sound economy and a sound currency.

In history, Nixon should be seen as the rule rather than the exception. Since every currency has been slaughtered throughout history, one particular leader will also be required to be the executor.

So in 1971, history had elected Tricky Dick to be the inevitable destroyer of the dollar.

Nixon's lies
I don’t quite know what the definition is of “suspend temporarily” but 50 years seems to be pushing the limit!

And as regards the strength of dollar goes, we all know what happened to the “strength of the currency”! Please see the illustration of the dollar collapse further on in the article.

Continue reading→

Gold & Basel III’s Trillion-Dollar Question, by Matthew Piepenberg

As banks shift their paper and physical gold positions after Basel III’s effective date, what will be the effect on the gold price? From Matthew Piepenberg at goldswitzerland.com:

June 28th has come and gone, which means the much-anticipated Basel III “macro prudential regulation” to make so-called “safe” banks “safer” has officially kicked off in the European Union (as it will on July 1 for U.S. banks and January 1, 2022 for UK banks).

The trillion-dollar question for gold investors is now obvious: What next?

The short answer is:  Gold will rise, but don’t expect a straight line or zero discomfort/volatility.

The longer answer, however, deserves a bit more context, unpacking and plain-speak; so, let’s roll up our sleeves and start from the beginning.

What is Basel III?

Basel III is essentially a long-delayed, controversial and internationally agreed-upon banking regulation which now, among other things, requires commercial banks to change their “net stable funding ratio” for gold held as a tier 1 asset on their balance sheet from 50% to 85% to make banks “stronger and more resilient in times of crisis.”

(Hidden premise: Are the BIS and its regulated banks worried about another “crisis”?)

Translated into non-banker English, for each asset a bank buys, they have to insure “stable funding” (as opposed to repo money, demand deposits or excess leverage) to buy/lever more stuff…

Translated even more simply, banks can’t use as much “maturity transformation” or “duration mismatches”—i.e., leverage and short-term money for long-term speculation (arbitrage)—to buy and sell precious metals, among other things.

Basel III, in essence, is requiring banks to engage in longer (rather than shorter-term) lending, and in a nutshell, this makes it far more expensive for banks to own “unallocated” gold, as most of the gold they owned in the past was just tier 3 paperlevered to the moon.

Getting back to more banker-speak, Basel III is an open move that requires banks to de-lever (slow down) their trade in paper gold.

Continue reading→

Why Gold? by Adrian Day

Through history, the reasons to own gold haven’t changed much, and it’s usually been a good idea. From Adrian Day at internationalman.com:

At a time when many investors are calling gold “a relic,” and many younger ones, in particular, are buying Bitcoin instead, it is worth going back to fundamentals and looking at gold’s role as money over thousands of years. I am not here to attack Bitcoin. Rather, I am here to defend gold.

Gold has an advantage that Bitcoin does not have, that Bitcoin inherently cannot have, which is its age. Gold has survived and performed its job for literally thousands of years. We shall have to wait a little longer to say that Bitcoin is as good as gold.

Nearly two-and-a-half millennia ago, Aristotle wrote his famous treatise on money. Money serves as a medium of exchange, a store of value, and a unit of account. In his treatise, Aristotle listed the characteristics of ideal money.

Money should be divisible, which is why we do not use fine art as money. It should be fungible, which is why we do not use real estate as money. It should be rare, which is why we do not use iron ore as money, and so on. Aristotle concluded that only gold has all these attributes and is the ideal form of money.

Continue reading→

The Geopolitics of Gold, by Alasdair Macleod

If the world goes gold, and there’s every reason to think it will, sooner or later, the Chinese will be sitting in the catbird seat. From Alasdair Macleod at goldmoney.com:

A number of events are coming together which are set to push gold prices higher. Besides a combination of continuing inflationary policies and massive future budget deficits undermining the dollar, by closing down derivative market activities new Basel 3 regulations appear set to deflect some demand into physical metals. Furthermore, liquidity in gold markets will contract, potentially making prices more volatile

This article looks at how these developments will affect the undeclared but very real financial and propaganda war being waged by America against China.

China is moving on, enlarging its own middle class which will benefit from a stronger yuan, much as the German and Japanese economies did between 1970—2000. Having dominated economic developments until now, the export trade is becoming less important. With this dependency lessening, the argument in favour of a coup de grace against the dollar by China revealing its true gold position is increasing.

In this article, China’s undeclared gold reserves are quantified, and we can be confident that China has at least 20,000 tonnes “off balance sheet”. For China to openly declare her gold position always was her final, almost nuclear option in the financial war waged against her by America. Unwittingly, by diverting demand from paper gold to physical bullion, Basel 3 may have brought forward that day by default.

Introduction

The imminent introduction of Basel 3’s net stable funding ratio is going to have a major impact on the global banking system, and it is a reasonable assumption that government agencies concerned with geopolitical implications will be considering it from that point of view. And nowhere is this more important than for gold, and by implication the dollar’s unrivalled hegemony.

Continue reading→

Russia’s $186 Billion Sovereign Wealth Fund Dumps All Dollar Assets, by Tyler Durden

The Russians know a bad deal when they see one. From Tyler Durden at zerohedge.com:

Following a series of corporate cyberattacks that American intelligence agencies have blamed on Russian actors, Russia’s sovereign wealth fund (officially the National Wellbeing Fund) has decided to dump all of its dollars and dollar-denominated assets in favor of those denominated in euros, yuan – or simply buying precious metals like gold, which Russia’s central bank has increasingly favored for its own reserves.

Finance Minister Anton Siluanov

Finance Minister Anton Siluanov made the announcement Thursday morning at the annual St. Petersburg International Economic Forum.

“We can make this change rather quickly, within a month,” Siluanov told reporters Thursday.

He explained that the Kremlin is moving to reduce exposure to US assets as President Biden threatens more economic sanctions against Russia following the latest ransomware attacks. The transfer will affect $119 billion in liquid assets, Bloomberg reported, but the sales will largely be executed through the Russian Central bank and its massive reserves, limiting the market impact and reducing visibility on what exactly the sovereign wealth fund will be buying.

“The central bank can make these changes to the Wellbeing Fund without resorting to market operations,” said Sofya Donets, economist at Renaissance Capital in Moscow. “This in some sense a technical thing.”

Jordan Rochester, currency strategist at Nomura International PLC, said, “This is a transfer of euros from the central bank to the wealth fund, we’ll then see the central bank the holder of the USDs and it’s up to them to manage it. No initial market impact.”

The news isn’t a complete surprise: The Bank of Russia, Russia’s central bank, has steadily reduced its dollar holdings over the last few years amid increasing sanctions pressure from the US and Europe. That trend continued through President Trump’s term.

Just a few days ago, we reported that the Russian parliament had just authorized the sovereign wealth fund to buy gold through the central bank. However, the central bank reports its holdings with a six-month lag, making it impossible to determine its current holdings.

Continue reading→