July 2024
There are now $35 trillion reasons why demand for gold is surgingā¦
šµ Significant Money Printing: From 2000 to 2024, the M2 money supply increased from $15 trillion to $22 trillion. This has decreased the purchasing power of the dollar by 25-30%. Gold is needed to preserve value.
š Geopolitical Conflict: Ongoing major conflicts around the world are spurring safe haven demand.
š¦ Central Bank Purchases. Central banks are buying gold at the fastest rate in 55 years. They seek to fortify their own economies by hedging against inflation, moving away from the dollar, and securing against potential sanctions.
š National Debt: Now $35 trillion and climbing fast, the national debt is at crisis levels. The cost to service the runaway debt could cause hyperinflation and strangle all government services, including Social Security.
In fact, since the Financial Crisis in 2008, the U.S. National debt has exploded from $8 trillion to $35 trillion dollars… Hyperinflating the stock, bond and real estate markets & has created the largest financial bubble in U.S. history.
Founding father. James Madison, once called a large national debt a “public curse.”
“I go on the principle that a Public Debt is a Public curse and in a Rep. Govt. a greater than in any other.”
Thatās because, as Madison put it, debts are one of a trio of tools that people with power use to establish tyranny.
āArmies, and debts, and taxes are the known instruments for bringing the many under the domination of the few.ā
Madison was far from alone.
Thomas Jefferson said he considered “public debt as the greatest of the dangers to be feared. It is incumbent on every generation to pay its own debts as it goes. A principle which, if acted on, would save one half the wars of the world.ā
In his Farewell Address, George Washington urged us to use debt sparingly ā and actually pay it off as quickly as possible!
Because running a perpetually growing debt is not just a bad economic choice, itās also a threat to national security.
Benjamin Franklin warned that running into debt gives āto another Power over your Liberty.”
The stability of our financial system is under serious threat. Soaring national debt will trigger another financial crisis, devastating retirement- savings.
“Politicians have racked up $35 trillion in debt, and are on the hook for another $200+ trillion in āunfunded promises.ā Together they broke it and make no reasonable attempt to fix it.” – Dennis Miller.
When Congress effectively eliminated the debt ceiling on June 5, 2023, the national debt stood at $31.46 trillion. Since then, the Biden administration has added $3.54 trillion to the national debt in just one year!
The relationship between the price of gold and the U.S. national debt, shows a clear long term trend.
As debt continues to expand, gold continues to be the ultimate safe haven for investors seeking financial security.
At the halfway point of 2024, hereās what the worldās foremost Financial expertās & economists are sayingā¦
“Inflate or Die.” #1 Aden Forecast Newsletter š°
“There are only 4 ways to eliminate debt: It can be forgiven, paid off, default, or if you are a government, you can debase the currency the debt is denominated in until it is virtually worthless.”
We don’t think the government will forgive, payoff or default on its debt. That leaves “inflate or die” as the only current option. That’s what the government has been doing for years and there’s no reason to think it will change until it simply can’t for whatever reason.
One only needs to look at history to see that it repeats itself again and again, and our generation is not going to be an exception. It was best said…
“Any great power that spends more on interest payments on the national debt than on defense will not stay great for very long.”
It’s been true of Spain, France, Ottoman Empire, British Empire, and this law is about to be put to the test by the U.S. beginning this year.
Indeed, the federal government will spend $892 billion during this fiscal year for interest payments on the national debt of $35 trillion- meaning interest payments now surpassed the amount spent on defense and nearly matches Medicare.
We’re living through history in the making in more ways than one, and it’s going to be important to be aware and prepared for what happens.
That’s why we believe the U.S dollar will continue to fall. It’s already slowly losing its currency reserve status as countries sell dollars and buy gold for their reserves. This in turn is why we feel so strongly about buying and holding gold for the long term. Not only is it headed sharply higher, in the current environment, it also provides safety and a way to preserve your purchasing power. It’s an important hedge against what’s coming downstream.”
The Great Inflation Deception šµ
“The White House keeps telling us how great the economy is & inflation is coming down!
Meanwhile, many are struggling just to pay the bills.
How bad is it out there for the average person?
Well, a TikToker discovered an option to reorder a 2022 grocery list from Walmart. The 45 essential items cost $127 when he ordered them 2 years ago.
And what did that same
basket of items cost today?
$414.
You read that right. The cost of a basket of identical goods nearly quadrupled in just 2 years!
Thatās a 226% increase, making the annual food price inflation rate 113%.
How in the world did prices go up that much when the official CPI is only running 3.3%? Even at its peak in June 2022, CPI was just a little over 9.1%.
If you think the government numbers might be understating the problem, youāre right.
The government CPI formula was suspect, to begin with, and then the government revised the formula in the 1990’s so that it understates the actual rise in prices even more than it used to.
If you run todayās data through the 1970’s formula, CPI would be about double what the government reports today. In other words, that 9.1% CPI reported in June ā22 would have been over 18% in the 1970’s.
As economist Milton Friedman once quipped, ā[Inflation] is always and everywhere a monetary phenomenon. Itās always and everywhere a result of too much money.ā
Simply put, central bank money creation is inflation. One of the symptoms of this monetary inflation is rising consumer prices.
Economist Henry Hazlitt explained it this way in āInflation in One Page:ā
“Therefore inflationāif we misuse the term to mean the rising prices themselvesāis caused solely by printing more money. For this the governmentās monetary policies are entirely responsible.”Ā
We have an inflation crisis ravaging our nation. Skyrocketing prices on food & rent has devastated the purchasing power of the U.S. dollar.
Inflation has also decimated the minimum wage over the past 6 decades. In fact, the minimum wage has fallen by over 70% since 1963.
The bottom line is we should never trust the governmentās bottom line.” – Michael Maharrey.
THE HIDDEN COST OF INFLATION: WHY GOLD OUTSHINES IN AN ERA OF CURRENCY DESTRUCTION. – BBN Times. š
In a world where the money supply is expanding at an unprecedented rate, the persistence of inflation is hardly a shock.
As governments continue to issue currency far beyond the demand of the private sector, the value of money erodes, leading to a hidden transfer of wealth and a silent tax on savings and wages.
Why would the government be interested in eroding the purchasing power of the currency they issue? It is remarkably simple…
Inflation is the equivalent of an implicit default. It is a manifestation of the lack of solvency and credibility of the currency issuer.
Governments know that they can disguise their fiscal imbalances through the gradual reduction of the purchasing power of the currency. Inflation is a hidden transfer of wealth from deposit savers and real wages to the government; it is a disguised tax.
Economists warn of rising debt, which is correct, but we sometimes ignore the impact on currency purchasing power of unfunded liabilities.
The United States debt is enormous at $35 trillion, and the public deficit is intolerable at nearly $2 trillion per year, but that is a drop in the bucket compared with the unfunded liabilities that will cripple the economy and erode the currency in the future.
The estimated unfunded Social Security and Medicare liability is $175.3 trillion (Financial Report of the United States Government, February 2024)
Gold vs. bonds shows this perfectly. Gold has risen 89% in the past five years, compared to 85% for the S&P 500 and a disappointing 0.7% for the US aggregate bond index (as of May 17, 2024, according to Bloomberg).
Financial assets are reflecting the evidence of currency destruction. Gold soars; bonds do nothing. It is the picture of governments using the fiat currency to disguise the credit solvency of the issuer.
Considering all this, gold is not expensive at all. It is exceedingly cheap. Central banks and policymakers know that there will be only one way to square the public accounts with trillions of dollars of unfunded liabilities. Repay those obligations with a worthless currency. Staying in cash is dangerous; accumulating government bonds is reckless; but rejecting gold is denying the reality of money.
Forbes: Why Commodities like Silver, Oil & Gold are Soaring Amidst Rising Inflation šµ
Research from Goldman Sachs shows that a 1% point increase in U.S. inflation has historically led to a real return gain of 7% points for commodities. Meanwhile, the same trigger caused stocks and bonds to decline by 3 and 4% points, respectively.
In times of rising prices, having exposure to tangible assets like silver, oil and gold retain their value better than paper assets.
The reason I mention silver, oil and gold is because they were the top performing commodities in the first half of 2024.
Silverās Fourth Year Of Market Deficit Could Spell Opportunity
Leading the charge is silver, up close to 27.5% in the first half. The āpoor manās goldā is proving its worth, driven by a global supply deficit and increasing demand. Back in January, the Silver Institute forecasted that global silver demand will reach a near-record 1.2 billion ounces in 2024, up 1% from last year. This growth is primarily fueled by industrial applications, particularly in the booming solar energy sector.
Goldman Sees $2,700 Gold On The Horizon
The yellow metal has shone brightly in 2024, rising 16.8% year-to-date and outperforming many major asset classes. This performance is particularly impressive given the high interest rates and strong U.S. dollarāconditions that ordinarily create a challenging environment for gold.
Whatās behind the metalās resilience? Itās a perfect storm of factors: continued central bank buying, strong Asian investment flows, steady consumer demand and persistent geopolitical uncertainties.
Looking ahead, Goldman has set a bullish target of $2,700 per troy ounce for gold by year-end. Thatās an increase of about 15% from current levels. They cite solid demand from emerging market central banks and Asian households as key drivers.
As we move into the second half of 2024, the commodities market continues to offer intriguing opportunities. Silverās industrial demand, particularly in the green energy sector, presents a compelling growth story. And gold, the eternal safe haven, continues to prove its worth in uncertain times.
Long-Term Gold & Silver Performance Expose Stock Marketās Phony Gains š¦
Wall Street was ecstatic after the Dow Jones Industrial Average (DJIA) hit 40,000 for the first time ever last month. The nominal record made for plenty of headlines.
The Dow was indeed racing higher in terms of depreciating U.S. fiat dollars. But what about in terms of real money ā gold and silver?
The headline news not being reported in the mainstream financial media is that the stock market benchmark just fell ā yes, fell ā to a 2-year low in real terms.
It may seem hard to believe that the stock market is losing value at the same time as its gains are being widely celebrated, but the charts donāt lie.
The DJIA:gold ratio peaked all the way back in 1999.
Itās been 25 years since stocks have made new highs in terms of gold.
The DJIA is also starting to lag behind silver. The Dow:silver ratio suffered a significant breakdown ā the very day the Dow closed above 40,000!
“A stealth bear market in stocks is now underway…Few investors are aware of it. Their brokerage account statements still show gains being registered. But those gains exist only in terms of phony, paper money.” – S. Gleason.
Even more alarming, is the fact that stocks are extremely overvalued today, trading at Double their historic P/E ratios. Showing a major stock correction is long overdue…
Since 1929 there have been 20 major stock market crashes, about 1 every 5 years, with an average fall of 36%. In each case gold has held its value or appreciated greatly.
š“ Gold – The New Reserve Asset: Price target of $7,000-$15,000 by 2030 is just a return to the ālong-term average.’ | Kitco News
U.S. Treasuries will be dumped as global reserves by 2030 as the U.S. dollar gets re-priced from “widely overvalued” levels, triggering 300% returns in gold.
According to Luke Gromen, founder and president of Forest for the Trees (FFTT).
This is about as big as when [former President Richard] Nixon closed the gold window.”
Gromen explains that the dollar system as we know it is dying, with the the U.S. treasury bond losing its position as the world’s primary reserve asset. This is why the greenback will get re-priced.
The New Global Reserve Asset.
The U.S. Treasury market has been losing its share as a primary global reserve asset since 2014 because global central banks have sold $400 billion worth of Treasuries and bought $600 billion worth of gold.
Gold has been seeing solid gains this year, up 17.5% year-to-date, after hitting multiple new record highs, and it will keep rising towards 2030, he noted.
Every single thing in macro is telling you it will keep going higher. You’re seeing the BRICS go into gold. You’re seeing Yellen throw 40 years of economic orthodoxy in the trash.
“Gold is doing what it’s doing because gold is taking the place of Treasury bonds as a primary reserve asset globally at the central bank level.”
To put gold’s upcoming multi-year rally into perspective, Gromen said that gold’s move higher has barely begun. “To reflect a reversion to the mean of being the primary reserve asset, it needs to be orders of magnitude higher in price,” he said.
To get a more precise outlook, Gromen looks at the market value of U.S. official gold relative to foreign-held treasuries outstanding.
“In 1989, when the USSR fell, that percentage was 20%. When we had a dollar crisis in 1979 and 1980, the percentage was 134%. Fast forward to today, this ratio is at 7%. So gold would need to triple just to get back to the very bottom of the long of this range where we were in 1989, the last time we had a great power competition,” he estimated. This is Gromen’s conservative outlook.
Forbes: The Gold Standard Is Coming Back š“
The U.S. was on a gold-Ābased system for 180 years until the early 1970’s. We never had inflation when the dollarās value was tied to the yellow metal, and the U.S. experienced the greatest longĀ-term economic growth in human history.
Average historic growth rates have fallen by about a third. MeĀdian household income today would be at least $40,000 higher if our traditional pattern of growth for those 180 years had been maintained. Nonetheless, the scorn for a goldĀbased monetary system is universal.
Events though, have a peculiar way of forcing things once unthinkable into the forefront of consideration, and then into reality.
As governments flounder in their monetary policies, that will change.
One is that central banks in recent years have been purĀchasing gold at record levels. Buyers include China, India, Russia and a number of other nations such as Poland. These countries are reacting to growing doubts about the long-Āterm value of the dollar, which in turn is a symptom of the perceived decline of the United States.
The binge of debt creation, both public and private, will inevitably kindle crises that cannot be easily extinguished. Total debt in the world today is more than $300 trillion, an astonishing three times global GDP.
And, of course, we have the activities of the so-Ācalled BRICS: originally Brazil, Russia, India and Chinaāand a year later South Africaāwhich now includes several other countries. Oil giant Saudi Arabia is also considering joinĀing. Their monetary machinations, so far, have just began, and it’s starting to shift. The signs of change are now here.
Unlike a fiat currency, goldās value can never be hyperinflated away. Unlike a bond, it can never default. And unlike a publicly traded company (stock) it can never go bankrupt.
Investors have been diversifying with gold & silver for centuries to limit their exposure to poorly executed monetary and fiscal polices.
Precious metals are a safe, sound and predictable means of preserving and increasing wealth.
Summary: In 2024 the stock, bond & real estate bubbles may burst. While inflation makes our dollars worth less every day. (inflation) But, gold will continue to protect and grow savings as it has for 5,000 years.
It is dangerous to own risk assets such as stocks at artificially inflated valuations. It is especially hazardous to own false safe havens such as bonds, when their yields are so low that they are guaranteed to deliver negative real returns. (inflation)
Repositioning IRA/401K retirement-savings out of risk assets (stocks, bonds) and dollar denominated accounts (money market, CDs, annuities) into gold & silver now, could be the best financial decision you can make.
Gold offers unparalleled profit potential, a proven track record of appreciation, privacy and wealth preservation. Itās the perfect way to protect your money against inflation and overpriced stock market.
Today, more Americans are protecting their IRA/401k savings with physical gold & silver. A money that has no default risk and cannot be inflated away.
U.S. gold & silver coins have been a popular method of storing wealth for generations, which is no surprise considering that they have outperformed the S&P 500 for the past 25 years. ( PCGS 3000 Index) And appreciate at an average rate of 23% in years where inflation is at least 3%.
They have also produced spectacular returns during periods of relatively high, and rising, nominal interest rates. Thatās exactly what happened during the inflationary 1970s, as gold values increased 20 times during the decade. While stocks and real estate prices collapsed.
Don’t wait for the market to crash š Use inflation and the great dollar devaluation, to make once in a generation returns in guaranteed gold.
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