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Below we consider how modern currency policy may not be so good for, well, the people…

This is why gold inevitably enters the conversation, for unlike policy makers, this old pet rock garners more trust.

Gold, of course, loves chaos, tanking currencies and cornered, debt-soaked nations, the numbers of which rise with each passing day.

We see currency debasement as mathematically and historically inevitable, though we have no clue (no one really does) as to the precise date, trigger or time the already teetering fiat money systems fall over the global debt cliff.

We only know that the $300+T cliff is here, and that nations are racing toward it at historical speed, with equally historical consequences.

Physical gold holders, however, enjoy a certain and calm advantage: They don’t need to be precise timers; simply patient owners.

As for more signs of the move toward weakening currencies in general, and a weakening USD in particular, let’s look at some more history and current facts.

Hot vs. Financial Wars: Today’s Evidence, Tomorrow’s Polices

As headlines change with daily Western biases regarding the military war in Ukraine, America’s financial war with the East (i.e., China) will continue into the next generation.

It’s no secret to me, or many others, moreover, that the war in the Ukraine is a US proxy war against Russia, in which Ukraine (and its citizens) are merely a convenient battering ram against Putin.

That’s just my opinion, but we’ve seen this “freedom” movie before. Many times, and in many countries, none of which ended with much “freedom” …

But as to financial wars, they too are just an extension of politics by another means, and with the growing waves of de-dollarization rising in speed and height following the predictable ripple of effects of the 2022 sanctions against Russia…

…click on the above link to read the rest…

ANALYSIS: Will Zimbabwe Pave the Way for Gold-Backed Money?

June 1, 2023

ANALYSIS: Will Zimbabwe Pave the Way for Gold-Backed Money?

People walk past the Reserve Bank of Zimbabwe building in Harare, Zimbabwe, on Feb. 25, 2019. (REUTERS/Philimon Bulawayo/File Photo)

Will gold rescue Zimbabwe from the ashes of economic despair and usher in a new economic era?

Since Zimbabwe declared independence from the former Republic of Rhodesia in 1980, the southern African country has been ravaged by inflation and overall economic turmoil. Over the past 40 years, the annual inflation rate has only touched single-digit territory twice: 1980 (7 percent) and 1988 (7 percent).

Excessive money printing, fiscal mismanagement, economic sanctions, and currency instability have been the root causes of its perpetual financial crisis, resulting in political and social upheaval.

In 2008, Zimbabwe was given the unfortunate record of the highest inflation rate in the world, touching 250 million percent. This forced then-President Robert Mugabe and his government to abandon the Zimbabwe dollar and begin relying on nine foreign currencies, particularly the U.S. dollar and the South African rand. In 2019, Harare introduced a new Zimbabwean currency, but it did not take long for the revival of hyperinflation, with the inflation rate surpassing 600 percent by March 2020.

After numerous trials and errors on the monetary policy front, the Reserve Bank of Zimbabwe (RBZ) experimented with something old and something new: a gold-backed digital currency.

“Pursuant to the resolution of the Monetary Policy Committee (the MPC) on 28 March 2023 to complement the issuance of physical gold coins with gold-backed digital products, the Bank wishes to advise that it will be issuing gold-backed digital tokens with effect from 8 May 2023,” said RBZ Governor John Mangudya in a statement. “The gold-backed tokens will be fully backed by physical gold held by the Bank.”

Central bank officials say this money will be supported by 140 kilograms (4,900 ounces) of gold.

…click on the above link to read the rest…

Franklin D. Roosevelt’s Gold Heist

April 6, 2023

Franklin D. Roosevelt’s Gold Heist

Yesterday (April 5) marked the anniversary 0f the signing of Executive Order 6102 by President Franklin D. Roosevelt. It was touted as a measure to stop gold hoarding, but it was in reality, an attempt to remove gold from public hands.

Many people refer to EO-6102 as a gold confiscation order. But confiscation is probably not the best word for what happened in practice.

The order required private citizens, partnerships, associations and corporations to turn in all but small amounts of gold to the Federal Reserve in exchange for $20.67 per ounce.

The executive order was one of several steps Roosevelt took toward ending the gold standard in the US.

With the dollar tied to gold, the Federal Reserve found it difficult to increase the money supply during the Great Depression. It couldn’t simply fire up the printing press as it can today. The Federal Reserve Act required all notes to have 40% gold backing. But the Fed was low on gold and up against the limit. By enticing the public to give up its gold, the Fed was able to boost its own gold holdings and create more dollars.

EO 6102 followed on the heels of an order Roosevelt issued just weeks before prohibiting banks from paying out or exporting gold. Just two months after the enactment of EO 6102, the US effectively went off the gold standard when Congress enacted a joint resolution erasing the right of creditors to demand payment in gold. Then, in 1934, the government’s fixed price for gold was increased to $35 per ounce. This effectively increased the value of gold on the Federal Reserve’s balance sheet by 69%. By increasing its gold stores through the confiscation of private gold holdings, and declaring a higher exchange rate, the Fed could circulate more notes. In effect, the hoarding of gold by the government allowed it to inflate the money supply.

…click on the above link to read the rest…

If You Can’t Hold It, It’s Not Really Yours

March 14, 2023

If You Can’t Hold It, It’s Not Really Yours

The failure of Silicon Valley Bank and Signature Bank reminds us of a very important truth — if you can’t hold it in your hand, you don’t really own it.

That’s why it’s wise to hold at least some of your wealth in hard assets like gold and silver that are in your direct possession or at least stored in a secure, allocated, segregated, and insured storage facility.

The FDIC insures bank deposits up to $250,000. If you have more than that in a financial institution, you could lose everything above that limit if a bank fails.

Depositors at SVB and Signature Bank lucked out. The government has made provisions to cover uninsured deposits. But there’s no guarantee that will happen when the next bank goes under.

And even if you don’t have more than $250,000 in the bank, you could easily find yourself locked out of your account. Just last week, a computer glitch caused money in some Wells Fargo accounts to disappear.

There are also more nefarious reasons you could lose access to funds. The Nigerian central bank recently limited bank withdrawals in order to incentivize people to use its new central bank digital currency. In 2017, India faced cash shortages when the government declared that 1,000 and 500 rupee notes would no longer be valid with just a four-hour notice. And during its crisis, the Greek government shuttered banks and seized some bank deposits.

Most people assume “that can’t happen here” in the US. But as we saw over last week, the US banking system is vulnerable to collapse.

…click on the above link to read the rest…

Gold’s return as money

February 18, 2023

Gold’s return as money

The consequences of Russia and her Asian allies embracing gold backing for their currencies are poorly understood in western capital markets. This move could lead to the destruction of the global fiat currency system.

According to evidence which is widely ignored in western capital markets, a move by Russia to put a new trade settlement currency and possibly the rouble as well onto a new gold standard is becoming a certainty. As a weapon of mass fiat currency destruction, the timing is probably bound up in on-the-ground military considerations, which are already showing signs of escalating in Eastern Ukraine.

As well as using gold to undermine the western currency system, a return to a credible gold standard has significant advantages for Russia and for her allies in the Shanghai Cooperation Organisation, the Eurasian Economic Union, BRICS+, and all their commodity suppliers beyond Asia. At the same time, it would destroy the west’s fiat currencies and financial system.

This article explains how one part of the global economy can thrive while the other collapses.

Introduction

Recently, I have written about the signals emanating from Russia that President Putin is minded to re-adopt sound money by returning to some sort of gold standard. We do not yet know the details, but consider what he said at the St Petersburg International Economic Forum in June last year:

“Caught in the inflationary storm, many nations are asking, why bother exchanging goods for dollars and euros when they are losing value right before our eyes? Indeed, the economy of imaginary wealth is being inevitably replaced by the economy of real valuables and hard assets.

“According to the IMF, today’s global foreign currency reserves contain 7.1 trillion dollars and 2.5 trillion euros. And this money is depreciating at an annual rate of about 8%…

…click on the above link to read the rest…

Will Nuclear War, Debt Collapse or Energy Depletion Finish the World?

February 18, 2023

WILL NUCLEAR WAR, DEBT COLLAPSE OR ENERGY DEPLETION FINISH THE WORLD?

Fragility has probably never been greater in history. Just three words encapsulate the destiny of the world.

The THREE words are: WAR, DEBT, ENERGY

A FOURTH word will financially save the ones who understand its significance. It will also play a major role in the world’s future monetary system. The word is obviously GOLD. As the world moves from a fragile debt based Western system to a commodity and energy based system in the East and South, gold will assume a strategic role in the monetary system.

WAR – WWIII

War is obviously a potentially catastrophic threat since the sheer existence of the world and mankind is now at maximum risk. Wars are horrible whoever starts them. Since the beginning of mankind there have probably been over 100,000 important wars and conflicts.

Wars are horrible whoever starts them. Most wars end in major fatalities and injuries and a massive human and financial cost. And at the end of the war, the situation is often worse than when it started, like in for example Afghanistan, Vietnam, Iraq and Libya which countries the US invaded unprovoked. The same will most probably be the case in Ukraine.

There are always two sides to a war. I learnt many years ago that before we judge someone, we must walk three moon laps in his moccasins.

So let us first walk in Putin’s moccasins.

The whole West hates Russia and have personalised it to Putin. Few realise that many of the people behind Putin are extreme hardliners and much more dangerous. Historically, Ukraine (like many European countries) has had a motley existence. Since the late 1700s to 1991 Ukraine was part of Russia / Soviet Union with a brief interruption after the Bolshevik revolution in 1917.

…click on the above link to read the rest…

Gold And The Shrinking Trust Horizon

January 31, 2023

Gold And The Shrinking Trust Horizon

Last week I posted an article on the implosion of the official vaccine narrative. That’s a controversial topic so not surprisingly it generated some heat on both sides. And a few readers expressed the wish that I’d stay in my lane (precious metals investing) and avoid venturing into unrelated and less well understood territory.

But believe it or not, the public health establishment losing its credibility is related to precious metals, via something called the trust horizon. It works like this: When things are good and the people in charge of big systems seem to be running them well, we’re content to trust the experts. We keep most of our money in banks, brokerage houses, and crypto wallets that exist for us only as websites. We buy produce that’s grown in a different hemisphere and shipped via boats, trains, and trucks to corporate chain grocery stores. We vaccinate ourselves and our kids according to the schedules set by the NIH or the CDC. We pop pills on our doctor’s orders without doing any research. We eat processed foods on the assumption that the FDA keeps them free of dangerous additives. And we believe what we see on cable news.

In other words, our trust horizon, defined as the distance from ourselves at which we’ll believe what we’re told, is global. We assume everything everywhere is working for our benefit and we’re thus willing to put our welfare in those distant hands.

But let some big systems fail to take proper care of us and we pull back, finding people and institutions closer to home that we can see and judge first-hand. We move our money out of distant banks and brokers and into local credit unions whose managers live down the street…

…click on the above link to read the rest…

As West, Debt & Stocks Implode, East Gold & Oil Will Explode

January 29, 2023

AS WEST, DEBT & STOCKS IMPLODE, EAST GOLD & OIL WILL EXPLODE

“The risk of over-tightening by the European Central Bank is nothing less than catastrophic” says Prof Kenneth Rogoff .

At Davos he also said: “Italy is extremely vulnerable. But this could pop anywhere. Global debt has gone up massively since the pandemic: public debt, corporate debt, everything.”

Rogoff believes that it is a miracle that the world averted a financial crisis in 2022, but the odds of a major accident are shortening as the delayed effects of past tightening feed through.

As Rogoff said: “We were very fortunate that we didn’t have a global systemic event in 2022, and we can count our blessings for that, but rates are still going higher and the risk keeps rising.”

But lurking in the murkiness is also the global financial assets/liabilities which is almost $500 trillion including the shadow banking system at 46% of the total. The shadow banking sector includes pension funds, hedge funds and other financial institutions which are largely unregulated.

Shadow banking is not subject to the normal mark-to-market rules. Thus no one knows what the real position or losses are. This means that central banks are in the dark when it comes to evaluation of the real risks of the system.

Clearly, I am not the only one harping on about the catastrophic global debt/liability situation.

And no one knows the extent of total global derivatives. But if they have grown in line with debt and also with the shadow banking system, they could easily be in excess of $3 quadrillion.

Cultures don’t die overnight, but the US has been in decline since at least the Vietnam war in the 1960s. Interestingly, the US has not had a real Budget surplus since the early 1930s with a handful of years of exception.

…click on the above link to read the rest…

Gold Or Silver?

January 21, 2023

Gold Or Silver?

You want both, obviously, but how much of each and why?

At first glance, gold and silver seem pretty fungible. They’re both hypnotically pretty. Their prices tend to rise and fall according to the same financial/political forces. They’re both seen as real money by a tiny (very wise) fraction of the population and as atavistic relics by the vast, ignorant majority. And – most important – they will both preserve their owners’ purchasing power when today’s fiat currencies evaporate like the fever dreams they always were.

So you definitely want some (and maybe a lot) of each. But gold and silver are not identical. They have different strengths and weaknesses in various “monetary reset” scenarios. And their prices don’t move in lockstep. Sometimes one is cheap relative to the other.

So how much of each should we own now, and how quickly should we plan to load up the truck? The answer is different for each person, but a few things are generally true.

The gold/silver ratio
The relative prices of gold and silver tend to fluctuate within a broad but discernable range. This gold/silver ratio is expressed as the number of ounces of silver it takes to buy an ounce of gold and tends to rise and fall along with the emotional state of precious metals investors. When those investors don’t foresee imminent inflation or other monetary disruptions, they gravitate towards gold’s safety and stability, and shy away from silver’s volatility. Gold’s price rises relative to silver’s, producing a high gold/silver ratio.

When investors expect rising inflation or other kinds of currency instability, they buy precious metals generally, but gravitate towards silver’s greater upside potential. Gold and silver both rise but the gold/silver ratio falls as buyers push silver’s price up more quickly than gold’s.

…click on the above link to read the rest…

Zoltan Pozsar, the Four Prices of Money, and the Coming Gold Bull Market

January 12, 2023

Zoltan Pozsar, the Four Prices of Money, and the Coming Gold Bull Market

Over the past 100 years there has been a correlation between major equity bear markets, adjustments in one of the four “prices of money,” and gold bull markets. If we let history be our guide, the current equity bear market is signaling a new gold bull market, supported by changes in the price of money.

With equities in a bear market, and the Fed adjusting the price of money, we can expect a gold bull market in the coming years.

One of the more intriguing financial analysts of our times is Zoltan Pozsar, Managing Director and Global Head of Short-Term Interest Rate Strategy at Credit Suisse. In his writings of the past months, one of the things that caught my attention was his framework for multiple prices of money. Remarkably, when I looked up big historical changes in the price of the US dollar, they usually succeeded equity bear markets and introduced gold bull markets. Because equities are in a bear market as we speak, we can expect a gold bull market in the years ahead, enabled by the Federal Reserve changing the price of money.

First, let’s see how changes in the price of the dollar have caused gold bull markets in the past 100 years. Then we will add the stock market.

The Four Prices of Money and Previous Gold Bull Markets

Pozsar’s money framework, which he got from his intellectual mentor Perry Mehrling, states money has four prices:

1) Par, which is the price of different types of the same money. Cash, bank deposits, and money fund shares should always trade at a one-to-one ratio.
2) Interest rates, which is the price of future money.

…click on the above link to read the rest…

Zoltan Pozsar’s Gold-mageddon Deconstructed

December 27, 2022

Zoltan Pozsar’s Gold-mageddon Deconstructed

“[B]anks have been managing their paper gold books with one assumption, which is that [Nation] states would ensure gold wouldn’t come back as a settlement medium.” -Zoltan Pozsar

Before we go any further, we read ZeroHedge’s report on this letter Dec 7th entitled: Zoltan Pozsar: Gold To Soar…When Putin Unveils Petrogold (ZH Prem) and have been thinking on it since. Here is one of those thoughts pertaining to Gold’s evolving market structure

The statement at top is arguably the most important sentence in Zoltan’s recent post entitled: Oil, Gold ,and LCL(SP)R. It is how he closes that note.

If you have read his letter (excerpt below) you may prefer quotes pertaining to Gold’s price jump from $1800 to $3600 or Pozsar’s follow up statement to the price of Gold potentially doubling where he wrote: Crazy? Yes. Improbable? No.

Those statements certainly are nice to read for real-money advocates; especially coming from one of the most respected economists on the street these days. We cannot lie it makes us smile as well.

However, for anyone with precious metals exposure, like a bank or presumably you reading this piece (thank you for that), the quote at top should rule them all. Here’s why…

Why Banks Short Gold

Zoltan, possibly inadvertently, gives readers the rationale by which banks have been profitably shorting Gold since the 1990s. Here is our translation of that same sentence at top.

Translated from the original Zoltanese:

Banks have been using rehypothecation for decades fearlessly with approval of global governments who promised them Gold would never be used as a settlement medium—i.e. have a practical use — again.

…click on the above link to read the rest…

The “Barbarous Relic” Helped Enable a World More Civilized than Today’s

December 12, 2022

The “Barbarous Relic” Helped Enable a World More Civilized than Today’s

One of history’s greatest ironies is that gold detractors refer to the metal as the barbarous relic. In fact, the abandonment of gold has put civilization as we know it at risk of extinction.

The gold coin standard that had served Western economies so brilliantly throughout most of the nineteenth century hit a brick wall in 1914 and was never able to recover, or so the story goes. As the Great War began, Europe turned from prosperity to destruction, or more precisely, toward prosperity for some and destruction for the rest. The gold coin standard had to be ditched for such a prodigious undertaking.

If gold was money, and wars cost money, how was this even possible?

First, people were already in the habit of using money substitutes instead of money itself—banknotes instead of the gold coins they represented. People found it more convenient to carry paper around in their pockets than gold coins. Over time the paper itself came to be regarded as money, while gold became a clunky inconvenience from the old days.

Second, banks had been in the habit of issuing more bank-notes and deposits than the value of the gold in their vaults. On occasion, this practice would arouse public suspicion that the notes were promises the banks could not keep. The courts sided with the banks and allowed them to suspend note redemption while staying in business, thus strengthening the government-bank alliance. Since the courts ruled that deposits belonged to the banks, bankers could not be accused of embezzlement. The occasional bank runs that erupted were interpreted as a self-fulfilling prophecy. If people lined up to withdraw their money because they believed their bank was insolvent, the bank soon would be…

…click on the above link to read the rest…

Zoltan Pozsar: Gold At $3,600 Is Not Improbable If US Refill Reserves With Russian Oil

December 6, 2022

Zoltan Pozsar: Gold At $3,600 Is Not Improbable If US Refill Reserves With Russian Oil

In his latest dispatch, Credit Suisse contributor Zoltan Pozsar shifted focus on his ongoing series about Bretton Woods III where commodities will dictate the new world order.

Instead, the author zeroed in on the depleting Strategic Petroleum Reserve (SPR) of the United States, posing the query of what comes next after the White House shipped its last scheduled release.

“Now that SPR releases are over, production cuts by OPEC+, re-routing [of Russian crude oil from Europe to Asia], and price caps (not to mention the risk of China re-opening due to protests), the question for the U.S, becomes what to do with the SPR? Release more? Refill?” pondered Pozsar.

Back in September, as well, US President Joe Biden’s administration said it is looking at refilling its oil reserves should crude oil prices drop below US$80 a barrel. The prices have traversed the levels below that said mark but the White House moved the price target lower in October after it announced its plan to release 15 million barrels of oil more.

“The Administration is announcing its intent to use SPR repurchases to add to global crude oil demand at times when the price of West Texas Intermediate (WTI) crude oil is at or below about $67 to $72 per barrel,” the White House statement then read.

After the US Department of Energy sold the last batch of crude oil from the historic SPR release, the reserves continue to bleed in the hopes of managing rising inflation and local energy prices. The current level is now below the 400-million barrel-mark, poised to hit a nearly 4-decade low.

…click on the above link to read the rest…

The Great Gold Robbery of 1933

November 26, 2022

The Great Gold Robbery of 1933

It’s been 75 years since the federal government, on the spurious grounds of fighting the Great Depression, ordered the confiscation of all monetary gold from Americans, permitting trivial amounts for ornamental or industrial use. This happens to be one of the episodes Kevin Gutzman and I describe in detail in our new book, Who Killed the Constitution? The Fate of American Liberty from World War I to George W. Bush. From the point of view of the typical American classroom, on the other hand, the incident may as well not have occurred.

A key piece of legislation in this story is the Emergency Banking Act of 1933, which Congress passed on March 9 without having read it and after only the most trivial debate. House Minority Leader Bertrand H. Snell (R-NY) generously conceded that it was “entirely out of the ordinary” to pass legislation that “is not even in print at the time it is offered.” He urged his colleagues to pass it all the same: “The house is burning down, and the President of the United States says this is the way to put out the fire. [Applause.] And to me at this time there is only one answer to this question, and that is to give the President what he demands and says is necessary to meet the situation.”

Among other things, the act retroactively approved the president’s closing of private banks throughout the country for several days the previous week, an act for which he had not bothered to provide a legal justification. It gave the secretary of the Treasury the power to require all individuals and corporations to hand over all their gold coin, gold bullion, or gold certificates if in his judgment “such action is necessary to protect the currency system of the United States.”

…click on the above link to read the rest…

$2.5 Quadrillion Disaster Waiting to Happen – Egon von Greyerz

November 3, 2022

$2.5 Quadrillion Disaster Waiting to Happen – Egon von Greyerz

Egon von Greyerz (EvG) stores gold for clients at the biggest private gold vault in the world buried deep in the Swiss Alps. EvG is a financial and precious metals expert. EvG is a former Swiss banker and an expert in risk. He says the risk in the global markets has never been this high.

EvG explains, “Credit has increased dramatically through derivatives. All instruments being issued now by banks, pension funds, stock funds, it’s all synthetic. There is no real underlying payments in anything almost. Therefore, my estimate for derivatives would be at least $2 quadrillion, and I think that is probably conservative. Then, we have debt on top of that of $300 trillion, and we also have a couple hundred trillion dollars of unfunded liabilities. So, we are talking about $2.5 quadrillion, and that’s with a global GDP of $80 trillion. So, there is a disaster waiting to happen, and especially because all this created money has created no value whatsoever. . . . I always knew this would collapse, and it’s taken longer than I expected, but I think we are at the end of a major era. . . . These derivatives, at some point in the coming few years, will actually turn into debt. Central banks will have to cover all the outstanding liabilities of the commercial banks as we are seeing now with Credit Suisse, Bank of England and etc. This is going to happen across the board. Whether it’s called derivatives or called debt, as far as I am concerned, it’s the same thing. It will have the same effect on the world financial system, which will be disastrous, of course.”

EvG says the derivative markets were simply a way for financial institutions to carry debt and not show it on their balance sheets. In the end, everything will balance out…

…click on the above link to read the rest…

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