Let's look around. With 99.9% certainty, I am confident that I have never witnessed a better setup for Gold in my 40-plus years in business and reporting on natural resources.
First, I can prove that all fiat currencies go to zero, but I will do that in another article. I challenge anyone reading this to find one fiat currency that has withstood the test of time.
When Voltaire said, "Paper money always returns to its intrinsic value zero," he meant that it has no inherent value and represents wealth. In other words, paper money is only worth something because people believe it is worth something, but when that belief erodes or disappears altogether, the money becomes worthless.
Today you can take his wisdom that rings true and sounds off as a warning against the dangers of inflation, which can erode the value of paper money over time. Essentially, his statement suggests that paper money is inherently unstable and can be subject to sudden and catastrophic loss of value.
I can also prove that fractional reserve banking and our monetary policy have fueled a 70% revolt against the dollar. When I say 70%, I mean that 70% of the globe's citizens, international transactions by countries, and now banks are planning various forms of exiting the US reserve currency position.
Why are banks hoarding Gold?
First, let's look at 2021, a record gold-buying year. According to the World Gold Council, central banks bought 647 tons of Gold in 2021. This was 29% higher than the previous year and the second-highest annual net purchases on record.
Several central banks increased their gold reserves significantly in 2021, with the most significant purchases made by Hungary, India, and Thailand.
The trend of central banks buying Gold has been increasing in recent years as they look to diversify their reserves away from the US dollar and other currencies.
In 2022, in addition to the biggies (China, Russia, India) now add Singapore, Turkey, Egypt, Qatar, Iraq, Hungary, and Poland plus just too many to list.
So Central banks in 2021 bought 647 tons of Gold (emphasis: 29% higher than 2020). The next year, Central banks bought 1,136 tonnes of Gold in 2022 —a whopping 25% leap on top of a 29% jump. Remember the 29% year-over-year amplifies the previous 25% spike.
That's the most significant 3-year consecutive gold buying jump since such records have been kept.
Why such a buying frenzy?
The US government's increasing debt levels have grossly devalued the dollar. The US Federal Reserve's mismanagement of monetary policy (spilled over from GFC 2008 QE) and the irrational and ridiculous frequency of recent rate hikes signal that there is big trouble with what was once the World's #1 superpower. (USA)
We discussed above why Central banks are gobbling up Gold and exiting the dollar. Now the villagers are also fleeing the dollar.
Why are the citizens of the US exiting the US dollar?
Today's banking crisis is that debts are growing faster than the economy can pay. So when the Federal Reserve finally began raising the interest rates, this caused a massive problem for the banks.When interest rates increase, the market price of bonds and mortgages is much lower.
Because of the Fed's irrational rate-raising pace, a significant arbitrage opportunity emerged, and people jumped all over it.
Banks only pay depositors about 0.3% on deposits, creating a bank run. Depositors withdraw their money from banks to buy US treasury notes paying 4%. So savvy savers watch The Fed's every maneuver, and of course, these intelligent investors (in record numbers) withdraw out of the bank and buy Treasury notes or money market funds or something yielding more than the bank will pay.
But look what Gold has done since 2000.
Gold was $300, and today it's over $2,000 ( UP 7X , NOTHING ELSE HAS DONE THAT)
Conclusion
The global financial system is fragile and could collapse anytime due to excessive debt, derivatives, and artificially low-interest rates followed by the insane pace of recent hikes in too short of time.
The government never admitted we were in a recession and then hiked aggressively into a recession they denied existed. This has never happened in US history, and history writers will scoff at The Fed's foolish self-inflicted policy wound. Many skeptics like this reporter believe this is an intentional plan to wreck things to circle back with a CBDC as a solution.
Gold, minerals for electrifying and commodities are worth watching and buying.
Gold is becoming a means of exchange in a world where fiat currencies are no longer trusted.
If you don't buy gold/silver now, well...you have been warned.
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