Don’t Dismiss Gold & Silver…
The comments below are an edited and abridged synopsis of an article by Alasdair Macleod
This year may see the end of fiat currencies, led by the US dollar. The US money supply has accelerated at an extraordinary rate, a process that will continue.
Signals from the markets that a monetary collapse is increasingly include a weakening US dollar, Bitcoin’s price reflecting a growing disparity between the rate of its issue and that of fiat, rapidly rising commodity prices, and a bubble in non-fixed interest financial assets.
We have yet to link these events with a collapse in fiat currencies, but it is only a matter of of time, perhaps spurred on by a banking crisis, before a realization that a John Law-style financial asset and currency collapse is on the cards.
There is a shift in purchasing power away from fiat currencies. Soon, central banks will have to turn currencies into gold substitutes. Attempts at a monetary reset without the backing of gold will not only fail, but if the decline in fiat currencies is rapid, there will be insufficient time to implement fiat alternatives such as central bank digital currencies.
While fiat currency’s purchasing power collapses, demand for physical gold will increase its purchasing power, measured by the goods and assets it will buy. The desire to hoard gold will increase at the same time as there is a desire to dump fiat.
Many who think they have protected themselves with paper gold will find it evaporating due to it not being backed by readily available physical bullion. They are likely to add to the general demand to possess physical gold.
It is not a matter of the dollar’s purchasing power losing, say, 98% from today. We must also consider the scarcity of gold arising from an increased hoarding of the metal, which drives the paper money price up. Examples of this were commonplace in Germany and Austria in 1922-23 following WWII.
Hyperinflation impoverishes the professional middle classes and brings hardship to the wider population. This is the outlook for anyone who does not take the precaution of owning gold.
Up for discussion: Introduction; currency values are eventually determined by markets; the collapse of fiat wipes out financial services; Bitcoin is not suited to replace fiat; the return to sound money; the prospect for gold’s purchasing power; and silver.