The central banks of the world have been buying up gold at the fastest rate in 6 years. This is flashing warning signs for the future of the United States dollar.
Central banks (the Federal Reserve) and foreign governments hold literally trillions of dollars of reserves which they traditionally they acquire by buying U.S. government debt. To big institutions and banks, U.S. government debt is considered as an equivalent to cash and they use it as a form of money. U.S. debt is, therefore, extremely liquid. In fact, the $22 trillion US debt market is the biggest and most liquid market in the world.
More importantly, central banks hold U.S. dollars because that’s the global standard: the U.S. dollar has been the world’s primary international reserve currency for seventy-five years. But it sure looks like the elitists of the world want to buy a lot of gold removing it from circulation amongst the public.
According to Sovereign Man, the World Gold Council’s report showed that foreign governments and central banks have been buying a LOT more gold than in previous years. Net gold purchases in Q1/2019 among foreign governments and central banks was nearly 70% greater than Q1/2018 and the highest rate of first quarter purchases in six years.
The Chinese in particular, have been stockpiling gold faster than ever, while at the same time, Chinese ownership of U.S. Treasuries as a percentage of total holdings has been gradually declining over the past years. The Chinese have been rapidly ditching the U.S. dollar and other countries are following suit.
The Congressional Budget Office forecasts that the United States government will never again see an annual budget deficit of less than $1 trillion starting in 2021, and should the political overlords decide to start handing out free college and writing of trillion in student loans while promising free healthcare to all, the deficit will explode like never before. All of that has a serious impact on the ability of the U.S. government to repay its obligations to foreign creditors. And now those creditors are wising up and unwilling to carry the risk of holding U.S. Treasuries.
Central banks themselves are on the verge of insolvency and in just as bad of a position as governments. The whole system will eventually collapse, but gold will still be around. It is not a variable. Virtually anywhere you can possibly go in the world, gold has value, and it’s definitely worth your consideration as a means to protect your wealth.
If central banks are buying up all the gold they can get their hands on, shouldn’t we be at least considering it too?
H/T [Sovereign Man]
“Throughout the ages, many things have been used as currency: livestock, grains, spices, shells, beads, and now paper. But only two things have ever been money: gold and silver. When paper money becomes too abundant, and thus loses its value, man always turns back to precious metals. During these times there is always an enormous wealth transfer, and it is within your power to transfer that wealth away from you or toward you.” – Michael Maloney, precious metals investment expert and historian; founder and principal, GoldSilver.com, and the author of Guide To Investing in Gold & Silver: Protect Your Financial Future.
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People worry about wealth leaving the nominal jurisdiction of the US.
But, stable, fungible gold represents a legal tax shelter, that can be carried in the palm of the hand, wired and transferred on paper.
A corporate person or bank sees itself as sovereign, so should support sovereign causes.
People worry about wealth leaving the nominal jurisdiction of the US.
But, stable, fungible gold represents a legal tax shelter, that can be carried in the palm of the hand, wired and transferred on paper.
A corporate person or bank sees itself as sovereign, so should support sovereign causes.
Gold is 87 times the current price of silver. Only the fiat increasingly worthless printing banksters and corporate bigwigs can afford enough at that price.
The pricing and ratios between two commodities are flexible, not written in stone.
In theory, they can accept your purchase and resale, before you are even billed for it — in 30ish days, depending on your timing.
So what do the Central Banks pay with? Fiat Money? Gold for paper?
I understand that there is talk that the U.S. might go back on the gold standard ? Just rumor maybe?
I’m not a PM guy. By most of what I can dig up on the value of all gold mankind has found and possesses from the beginning of our time to today and at present market prices is less than 9 trillion dollars.
There is no way the world is going to switch to using Gold as money. for example,
ht tps://www.numbeo.com/cost-of-living/country_result.jsp?country=China&displayCurrency=USD.
Most those prices aren’t significantly different than can be found in America.
There simply isn’t enough gold.
relik, of course you can. All you have to do is revalue gold to the amount of currency there is. So gold will be 40,000 an oz. Pretty easy.
Why revalue anything? It ain’t never going to happen. The world currencies are free floating with the exception of a few pegs. Money is just a bunch of numbers, doesn’t have to be backed by anything, never will be backed by anything.
Why back a currency in gold? Oil would be more like it – it has uses and high demand, or ask Al Gore, he’d back the world currency against carbon credits in some sort of UN world bank scam where you can’t buy anything without the Mark of the Bern and a Facebook Social Score of 990.
Gold will likely follow the S&P and the world national debts, suppose when the US hits $50T in debt suppose gold may be $2,500., and the S&P maybe 20,000.
In the future where most people are redundant and no working just living off a world corporation citizen stipend I don’t see gold above $100oz, also iPhone likely will be given away in Cracker Jacks, money will become tight and the value of all assets will crash.
Don’t be greedy because some think gold ought to be $5,000 an ounce just because of the national debt. Still alot of suckers that bought between $1,500 and $1,950 holding the bag from the last SHTF hysteria.
I get your point but. Using resources like oil as backing has a big flaw, it can and will run out eventually. It is used up as that is it’s purpose. Gold is a bit different. All the gold ever mined (99.9%) is still around. It isn’t being used up or burned. So it is a stable backing compared to other things like oil. Or maybe the fiat game can go on forever hell I don’t know but gold has been real money for millenia. Why else would banks be buying it up especially foriegn banks (big time buyers). That should be a clue…
Genius, yes. That is the simple answer. The fact that relatively little physical gold is available is a mute point. The key to gold is that its amount is basically fixed. But the naysayers’ discount the fact that it (and silver) are real money. They think of gold in terms of fiat dollars rather than thinking of fiat dollars in terms of gold.
Gold-Silver ratio historically is 16 to 1.
So either Silver goes WAYyyyyyyy up or Gold down.
Silver price has been minulipated and surpressed, so I’m betting Silver UP.
Gold was at 1300.00 today. Divided by 16 is
Silver at $80.25 per ounce
Which if I recollect was the ratio when we had real money. A silver dollar had .76 oz of silver a 20 dollar gold piece was uh I ferget but close to an oz. So ya about 16 to 1.
Can’t eat it….
Sigh. ….and another one misses the point. I’ll try to make it easy:
You cant eat paper either.
In fact… Its not about eating. Its about managing and retain your wealth, long term.
If you are implying you don’t have enough food and are already considering the possibility of having to barter whatever silver you are putting aside, you’re an idiot and need to go get the food situation squared away in its entirety Right Now.
The PM conversation is for the adults who already have the other bases covered adequately and want to retain their remaining wealth through crises large and small.
Hmmm
Over the last 4 decades the “Central Banks” have been incredibly good barometers of Gold Prices. Generally speaking, these bell-weathers have a consistently bought gold when prices were near cyclical peaks and sold gold near all time lows.
It takes the mind of a career “public servant” to accept the notion that buying high and selling low is good government, let alone sound fiscal policy…..The only way I can reconcile this kind of reoccurring incompetence and fiscal malfeasance is to assume that those in a position to influence or dictate the related fiscal policy are personally receiving either directly or indirectly, some kind of fiscal “motivation” themselves.
I’ve seen this story regurgitated every time the markets fall 1% every time since 911.
The fact is gold is just a paperweight.
Now if they *stopped mining the shit faster than it is consumed*, then I’ll buy some. The value of gold is mainly doomed to be what ever the electronic industry will pay. Heck even the millennials ain’t buying gold rings for their sweeties, just junk for their pierced private labias…just checking to see if anyone reads this shit
You see if the SHTF or the economy falls like a rock, so too will the price of gold.
And no, no nation is going to back their currency with gold as the banksters would then end up with it all. Imagine if the dollar was always backed 1 to 1 with gold, the Federal Reserve would then have $22T in gold in their vaults. It will never happen.
I hear the SHTF then aluminum foil and safety pins will be king.
That is not true. In the last recession gold went up. Pretty much the same as it did with every other recession. It preserved peoples wealth. Yes it has mania spikes but keeps going up up up. If what you say was true gold would still be 20.00 an oz. That aint EVER going to happen and thats a fact. Millenials don’t buy it because they are stupid and buy useless shit to impress their friends. When shtf and gold goes ballistic the govt. will try and confiscate it like before on the pretense that it is the currency of terrists, BANK ON IT! But the black market will thrive and there will be NO shortage of buyers!
Oh ya the great depression! Once the confiscation order was in place it went from 20 to 35 bucks overnight. Wow, now why was that do you think????
You’re right. It went from 20 to 35 dollars. This wasn’t a free market revaluation. The Treasury raised the price to devalue the dollar. This was when there was still a gold standard, but the government was short on dollars. It was a technical default because the Treasury no longer honored the original redemption price.
It’s probably good to hold some precious. You run the risk of confiscation, like you said, but I doubt the .gov will be operating. If things collapse in a big way, you won’t get many real needed things for your PMs. How much is the potato farmer going to give you for a silver eagle? He will look at the 1 dollar denomination and give you maybe a pound or two of potatoes for it. Or try to tell him that Roosevelt dime is worth a dollar. Only about 2% of the population consider precious to be money, so I doubt he will. In this situation, I would rather be selling the potatoes than bartering with silver. Who knows, if you try to tell him that an eagle is worth the before-the-collapse spot price, and not a dollar, he may feed you to his hogs. The value of precious will be determined by the seller of goods and not the buyer of goods in a collapse situation. I think Coinflation will be off line, so no way to value in FRNs.
Eventually, after the big die-off, precious may be used as money again. Until then, I think holding 20 dollar bills in number 10 cans…like the mushroom said…will be more useful because 98% of the population consider it money.
Of course this is jmo…ymmv
Post Script
I think the utility of your home made drink will be more useful than precious in a collapse situation.
You all do what you want. Beans, bullets, and bullion. I have invested in those three along with cash, 401K, HSA, IRA, etc. No debt except for the house and that I accelerate payments on. My collection of “going boom” continues to grow. I read all of this stuff, and then some, and do what is best for me and my wife. The kids are gone, though every once in a while they come back, which we enjoy and they too have managed their income to debt ratio. All be well.
Good show, brother. Nice to see a real-world, well rounded portfolio. Too many people plan for the apocalypse and forget about retirement (or their monthly bills.)
Mike Baloney has been peddling the silver and gold conspiracy for 10 years. Look at the charts of gold and silver.