Tag Archives: Gold

Gold and silver prospects for 2022, by Alasdair Macleod

The prospects for gold and silver next year resemble the metals themselves: bright and shiny. From Alasdair Macleod at goldmoney.com:

It has been a disappointing year for profit-seeking precious metal investors, but for those few of us looking to accumulate gold and silver as the ultimate insurance against runaway inflation it has been an unexpected bonus.

After reviewing the current year to gain a perspective for 2022, this article summarises the outlook for the dollar, the euro, and their financial systems. The key issue is the interest rate outlook, and how that will impact financial markets, which are wholly unprepared for the consequences of the massive expansions of currency and credit over the last two years.

We look briefly at geopolitical factors and conclude that Presidents Putin and Xi have assessed President Biden and his administration to be fundamentally weak. Putin is now driving a wedge between the US and the UK on one side and the pusillanimous, disorganised EU nations on the other, using energy supplies and the massing of troops on the Ukrainian border as levers to apply pressure. Either the situation escalates to an invasion of Ukraine (unlikely) or America backs off under pressure from the EU. Meanwhile, China will continue to build its presence in the South China Sea and its global influence through its silk roads. Less appreciated is that China and Russia continue to accumulate gold and are ditching the dollar.

And finally, we look at silver, which is set to become the star performer against fiat currencies, driven by a combination of poor liquidity, ESG-driven industrial demand and investor realisation that its price has much catching up to do compared with lithium, uranium, and copper. The potential for a fiat currency collapse is thrown in for nothing.

2021 — That was the year that was

This year has been disappointing for precious metals investors. Figure 1 shows how gold and silver have performed since 31 December 2020.

Having lost as much as 11.3%, gold is down 6.5%. And silver, which at one stage was down 19.3% is down 15%. Admittedly these returns followed strong gains in 2020, so 2021 could be described as a year of consolidation.

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Latest Treasury, Fed and BIS Reports Confirm: All Twisted Paths Lead to Gold, by Matthew Piepenburg

Gold is its owner’s revenge against lying monetary authorities. From Matthew Piepenburg at goldswitzerland.com:

The facts keep piling up, and recent BIS, Treasury and Fed reports confirm that all twisted paths lead to gold.

In a recent article, I posed the rhetorical question of when will policy makers finally stop lying and allow honest facts and natural market forces to return?

Lying is the New Normal

Unfortunately, as we examine the two latest working papers from the Fed/Treasury Dept cabal and the Bank of International Settlements, each confirms that lies are officially the new normal.

Over the years, we’ve tracked popularized delusions masquerading as policy with evidence rather than awe, addressing such topics as the open fictions of CPI inflation reporting and its “transitory” myth to the latest sample of double-speak spewing out of the Fed or White House.

Frankly, these well-masked fibs happen so frequently we never run out of material, including Biden assuring us earlier—and once again last week– of an “independent Fed.”

He’s trying a bit too hard to convince us, no?

History (Debt) Repeating Itself

History’s patterns confirm that the more a system implodes under the weight of its own self-inflicted extravagance (typically fatal debt piles driven by years of war, wealth disparity, currency debasement and political/financial corruption), the powers-that be resort to increasingly autocratic controls, distractions and automatic lying.

The list of such examples, from ancient Rome, 18th century France, and 20th century Europe to 21st century America are long and diverse, and whether it be a Commodus, Romanov, Batista, Biden, Franco or Bourbon at the helm of a sinking ship, the end game for bloated leaders reigning over bloated debt always ends the same: More lies, more controls, less liberty, less truth and less free markets.

Seem familiar?

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Gold-O-Mania Is Coming, by Egon von Greyerz

You can’t debase money as the Federal Reserve and European Central Bank are doing without people turning to real money—gold and silver—if they’re allowed to do so. From Egon von Greyerz at goldswitzerland.com:

The buoyancy of markets in recent years has lulled central bank heads into a false conviction that they had saved the world after the 2006-9 Great Financial Crisis.

But central bankers continue to navigate like drunken sailors between the evil forces of Scylla and Charybdis as in Homer’s Odyssey.

Few of the bankers have understood that printing unlimited and worthless paper money will not allow them a pass the strait of Messina without major, or more likely catastrophic, damage to the world economy.

As exuberance continues to dominate intoxicated stock market investors, they haven’t yet noticed that all is not well on the perilous seas.

Still, most markets continue to respond positively to the printing press rather than to the underlying fundamentals.

Printing presses don’t create real value, instead they create bubbles full of worthless air. But sadly intoxicated investors confuse air, which is free and has no value, with real, intrinsic values.

To take an example, what is the intrinsic value of Bitcoin or BTC? How should BTC be valued?

Does the $60,000 price today reflect the real value or was the 10 cent price 10 years ago more correct?

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Money, funny-money and crypto, by Alasdair Macleod

This is a great explanation of money and how money works in an economy, a shredding of Keynesian economics, a clear warning of what’s to come, and a dashing of hopes that cryptocurrencies will be the replacement for failing fiat currencies. Alasdair Macleod is one of the few economists who understands that debt is not money, that money cannot be a liability (see also “Real Money” by Robert Gore, SLL, September 9, 2015). From Macleod at goldmoney.com:

That the post-industrial era of fiat currencies is coming to an end is becoming a real possibility. Major economies are now stalling while price inflation is just beginning to take off, following the excessive currency debasement in all major jurisdictions since the Lehman crisis and accelerated even further by covid.

The dilemma now faced by central banks is whether to raise interest rates sufficiently to tackle price inflation and lend support to their currencies, or to take one last gamble on yet more stimulus in the hope that recessions can be avoided.

Politics and neo-Keynesian economics strongly favour monetary inflation and continued interest rate suppression. But following that course leads to the destruction of currencies. So, how should ordinary people protect themselves from currency risk?

To assist them, this article draws out the distinctions between money, currency, and bank credit. It examines the claims of cryptocurrencies to be replacement money or currencies, explaining why they will be denied either role. An update is given on the uncanny resemblance between current neo-Keynesian monetary inflation and support for financial asset prices, compared with John Law’s proto-Keynesian policies which destroyed the French economy and currency in 1720.

Assuming we continue to follow Law’s playbook, an understanding why money is only physical gold and silver and nothing else will be vital to surviving what appears to be a looming crisis in financial assets and currencies.

Introduction

With the recent acceleration in the growth of money supply it is readily apparent that government spending is increasingly financed through monetary inflation. Those who hoped it would be a temporary phenomenon are being shown to have been overly optimistic. The excuse that its expansion was only a one-off event limited to supporting businesses and consumers through the covid pandemic is now being extended to seeing them through continuing logistics disruptions along with other unexpected problems. We now face an economic slowdown which will reduce government revenues and, according to policy planners, may require additional monetary stimulation to preclude.

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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.

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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.

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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?

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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…

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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.

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