The rocky road to ruin
We face the end of the fiat currency era, which involves credit and currency destruction. No one should think that it’s a slam dunk for gold and silver traders — but it is for stackers.
We can be sure that some subscribers to MacleodFinance will have taken leveraged bets on gold and silver continuing to rise, despite our insistence that they should only be stacked and not traded. This brief article serves as a reminder in current markets why this is so, and to be content to just stack gold and silver.
Please feel free to forward to friends and colleagues.
The loss of purchasing power for fiat currencies is not over, as the chart above illustrates. Since the year 2000, the dollar has lost 93.2% of its purchasing power measured in real money. In fact, since the abandonment of Bretton Woods 54-years ago, the dollar has lost 99.2% of its purchasing power, measured in gold which is legal money in common law. It is gold which is stable over time, and fiat currencies which are not.
Fiat currencies always die. And they are on the rocky road to ruin.
Uninformed commentary always describes gold as being in a bull market, little different from bitcoin being driven entirely by real or imagined monetary risks. Indeed, the entire fiat currency credit system depends on this myth and almost no one from governments to central banks to investors questions it. No one seems to realise that it’s fiat currencies in decline.
Consequently, ignorance of the consequences of the death of fiat currencies is almost total. It’s estimated that investors in aggregate have less than 0.5% of their wealth invested in gold, the rest being in credit. Implied voting against gold is therefore 99.5%, yet it has been right to get out of credit and stack it for the last 54 years. And for the last four years, central banks have been selling fiat currencies for gold. Logically, they are the first cohort to understand the difference between someone else’s credit and real money. Others will follow.
We should not bother ourselves as to whether gold is under or overvalued at any particular moment. That’s for the birds. What matters is that the current correction, undoubtedly being driven by the unconscious vested interests of the macroeconomic community is an opportunity for stackers to stack, stack, and stack again.
Thanks Alasdair for the timely reminder and reassurance. We all needed this right now!
Well said. Completely irrelevant for investors rather than traders, but it's interesting to follow the footprints which are currently everywhere.
It's obvious the bullion banks are using the US shutdown to have some fun and square a few circles after this little post on cftc.gov.
"CFTC has curtailed its operations until additional appropriations are enacted."
Additionally the market in America has grossly overrated expectations of what may come out of the coming US-China trade talks in South Korea.
For some reason there is intense optimism that President Xi will throw in the towel, accommodate any US position and therefore drive a wedge into the BRICS alliance. That's just crazy talk.
If anything I wouldn't be surprised to find a bullion bank or banks acting for the Chinese or Indians to sit on spot prices of gold and silver because the endgame for the dollar is damned soon now. This may be the last opportunity to hoover up as much metal as possible while the 'regulator' is on a long holiday courtesy of Congress.