Gold and silver: bull or bear?
Having topped out above current levels before crashing lower, opinions are divided over whether prices are now going higher or lower. We examine the evidence…
The primary bull market is gold. Or rather, the primary bear market is fiat currencies. This is why central banks, Asian governments, and now wider Asian populations particularly in China and India are buying gold.
Unbeknown to US and European investors, gold, not the dollar, is legally money in everyone’s common law. The dollar is a fiat currency and as such is credit unanchored to any value. The fact that gold’s exchange rate against the dollar and other fiat currencies has been rising strongly is only partly due to gold rising, but mainly due to the dollar and other currencies declining. Asians and others in the global south have not bought into the US’s longstanding propaganda war against gold.
To be fair, investors in the west do understand that the dollar’s purchasing power is declining, but at the rate of the CPI index. They also learned the difference between unlimited and restricted credit creation from bitcoin.
However, investors seem unclear about gold’s true role beyond it being some sort of fear trade. Because they account in dollars, they think it is gold rising and they treat it like any other financial asset. They think in cycles, because that’s their experience of other financial assets. Furthermore, in the last 55 years there have been two gold bull markets followed by two bear markets, cycles by any definition.
No one can define future price relationships accurately. But we can examine the evidence that drives them. And this time, we are entering a financial war between the US and China, where it is becoming obvious that the dollar will be the casualty
