Gold Blazes a Historic Trail!

Majority Believe American Democracy is Failing!

Almost 4 out of 5 Americans believe that the US is in a crisis!

The new Quinnipiac University Poll found 53 percent of citizens believe American democracy is not working.

The poll finds 79 percent of American voters believe the country is in a state of “political crisis.”  Majorities believe that political violence is a “very serious problem” and are “pessimistic about free speech” in the US.

The symptoms of a national crisis, particularly a crisis of trust, are always visible in the economic sphere.

A majority of our fellow Americans are living paycheck to paycheck.  59 percent of them do not have enough savings to cover a $1,000 emergency.  In fact a third have no emergency savings at all!

At the same time Americans’ credit scores are falling at the fastest rate since the Great Depression.

It is only too easy to draw a straight line between the debasement of a nation’s currency and the breakdown of comity and trust, not to mention prosperity that accompanies comity and trust.  That relationship is self-evident.  A currency must be trustworthy.  It is like a person’s word.  For a sophisticated economy to function, we need to be able to take people at their word.  It engenders trust.  A person’s word should be “good as gold.”  A currency must be equally dependable for commercial activities to flourish.

When America’s governing classes began debasing America’s currency, they set the wheels in motion for the national crisis we are entering today.  When they removed the discipline gold provided to the emission of dollars, they lit the fuse for today’s national debt bomb of $38 trillion, which is 126 percent of America’s GDP.   

We know the rest of the world shares a skepticism about the value of the dollar.  Why not?  We just passed through an inflation not seen in forty years.  If the dollar was devalued by 20 percent during the Biden inflation, think of the losses suffered by foreign central banks that held US dollar bonds.  How would you like to lose 20 percent of a trillion dollar portfolio?  That’s a loss of $200 billion.  That would make anyone nervous.  

There is a lot more dollar inflation in the pipeline.  The Consumer Price Index in August rose at an annualized rate of 4.7 percent. Inflation has been above the Federal Reserve’s own target for 53 consecutive months.  At the same time, Washington takes in $5 trillion, but spends $7 trillion.  Does it sound like the management of the US dollar is in trustworthy hands?  No wonder central banks are lightening up on dollar bonds and going for gold.

One analyst made the observation that today’s record gold prices aren’t just a reaction to one month’s inflation numbers, or today’s changes in money supply figures.  We would say it is a more calculated assessment of an emerging monetary crises of historic proportions.  Stephen Innes, managing partner at SPI Asset Management, agrees and describe what is going on as “central bank accumulation, capital flight from fiat currencies, and geopolitical hedging that reeks of systemic mistrust.”

“Gold isn’t just climbing—it’s blazing a trail that feels both historic and unnerving,” he wrote this week.  ““Countries are deliberately diversifying away from the dollar, not out of mania, but from cold, strategic calculus,” he noted. “Beijing’s decision to open Shanghai as an alternative vault for official reserves is more symbolic than structural, yet it broadcasts a loud truth: any adjustment to the architecture of the global financial system carries with it an implicit bid for gold.”

It’s what you would expect in a crisis.  We hope you are taking appropriate measures to protect yourself and your wealth.  We are here to help.