Unlike the central bankers’ depreciating fiat currencies, physical gold and silver are incorruptible, free-market forms of money that retain their purchasing power over time.
China’s real estate behemoth Evergrande is now “Notsogrande”. Not surprisingly, fiat debt is the problem. The proposed “solution” is likely to be more debt… and more money printing. That’s great news for gold investors.
The other reasons as to why these markets continue to operate are less than legitimate. They are a great mechanism for bankers and regulators to control the price and demoralize gold bugs.
I still maintain the view that deflation will ravage the markets in the coming years once this bull market runs its course over the next two years, and the Fed will ultimately be powerless to prevent or stop it.
If the inflation numbers leave you scratching your head, join the club. The August data was especially perplexing. The Producer Price Index came in hot, up 8.3% in the last year, inviting 1970s comparisons.
Speculators have already done huge gold-futures selling in anticipation of coming Fed tightening, exhausting much of their selling firepower. And the market conditions today are way more bullish for gold than ahead of that last taper tantrum in mid-2013.
At the heart of all this growth was a ballooning central bank balance sheet. From 2000, when China joined the WTO until 2013, China’s central bank balance sheet grew almost 900%.
We now have genuinely crazy people in control of the apparatus of the state. They’re exactly the same psychological and philosophical profile as the Bolsheviks or the Jacobins. They’re not going to let go of power voluntarily. Anything is possible at this point; we’re still in the early days.
Those who call in seeking to make an investment in bullion get switched into a very different product – illiquid and overpriced “rare,” proof, and commemorative coins. And they are faced with large discounts when attempting to sell down the road.
