(David Smith, Money Metals News Service) Since the Federal Reserve detached the dollar from the gold standard in 1971, the world’s central bankers – with the Fed leading the charge, have flooded the world with fiat currency to the point of diminishing its purchasing power to shadow status.
A common belief during the early decades of the former Soviet Union’s rise after 1917 was that, according to Marxist-Leninist theory, the West and capitalism would either self-destruct, or be “buried” by the superior economic platform being constructed for the proletariat by the USSR, and later Communist China.
But even the Great Depression, which in the West lasted from the Crash of 1929, and arguably into WWII, failed to do the trick.
Much later, in a case of great historical irony, the West received a Christmas present of sorts, when on December 26, 1991 the Supreme Soviet voted itself and the USSR out of existence!
However, to say that the world is moving into uncharted waters as we head into 2020 could turn out to be a monumental understatement!
On the surface, the U.S. still enjoys – so far – a 10-year stock market bull run, record low employment, and fairly stable consumer prices. But under the hood, we’re piling up massive long-term debts which have little chance of being paid back at anything near today’s purchasing power.
Pouring more paper and electronic bytes into the system in order to stimulate growth is having the opposite effect. Consider the €15 trillion in Eurozone-issued paper, now literally paying less than nothing and accomplishing about as much.
Fiat currency simply floats to the top of the heap where it fuels market bubbles, stock buybacks, bigger management bonuses, and investments in billion-dollar (non)startups like WeWork.
The middle class once looked forward to “clipping” bond coupons during their “golden” years but are now being greeted with what the Bank of England calls “the lowest interest rates in 5,000 years.”
Meanwhile, Russia has become the world’s third largest gold producer (after China and Australia) and continues to import even more, with central banks doing the same!
Slowly the “powers that be” are starting to come clean about their (private) love – (public) hate relationship with gold, hinting that it just might have some redeeming features. The Dutch National Bank recently said:
“Gold is… the trust anchor for the financial system. If the whole system collapses, the gold stock provides a collateral to start over. Gold gives confidence in the power of the central bank’s balance sheet.”
So there you have it!
Our financial crystal ball is still a bit cloudy right now, but it’s not a stretch to consider that the global financial tectonic plates are under considerable stress as multi-causal socio-political factors conspire to grind them ever more tightly.
Once gold gets a few closes above its intermediate high around $1,575, perhaps before year end or soon thereafter, it will be motivated to run toward the next “resistance” level around $1,700 – as a start.
So don’t wait to act until the obvious is well under way. Get yourself positioned to play the long game and the Big Move.
As Nick Barisheff succinctly puts it, “The small minority of wealth preservationists will sleep well with their physical gold and silver, whilst the majority of the asset management industry are likely to have nightmares for many years.”
Act soon to acquire enough physical gold and silver so you can sleep well, counting your Maple Leafs and Silver Eagles, while others are counting sheep… or sitting up in bed with a bad case of FOMO – the Fear Of Missing Out.