Written by Bryan Lutz, Editor at Dollarcollapse.com:
Gold Bugs have been preaching the demise of fiat currency for decades. Although fiat currencies like the US Dollar still have utility, here’s why Gold Bugs can now claim victory.
After rampant pandemic money printing, the Fed and the US Treasury had to reconcile with rising inflation. So the Federal Reserve raising interest rates and committed themselves to an era of monetary tightening. Powell’s goal was to reduce the Fed’s balance sheet. In turn, they would lower inflation and provide for what they called a “soft landing” for the economy. Except gold began to tell a different story.
Gold and Federal Fund Interest rates have an inverse relationship. When the Fed raises interest rates, the value of gold should go down, or flatline.
It’s a similar relationship between Treasury Bonds and Gold. They have an inverse relationship. When bond prices go up, gold should go down. So when the Fed started raising interest rates, the same old story didn’t happen. The price of gold went up. This was gold’s first signal that this time, something was different in the debt-driven economy.
Two years later the price of gold had risen high enough to exceed the return on bonds over the last 50 years. The first time this has happened since 1979 except this time the road is different. There’s no petrodollar to run of too, and the United State’s debt level shows there’s no more money to fight the wars required for empire.
Another two years go by and the perils of a fiat-based monetary system continue to show. Gold is telling us that stock market prices are becoming as unreliable as bonds. Last week, gold began to outperform the S&P 500.
The prophetic words of the Gold Bug still hold true. The end of fiat is closer than we think it is. Gold is telling up in bonds and gold is telling us in stocks. A new gold-backed system is coming.
Gold Bugs win.
4 thoughts on "Gold Bugs Win (in 3 Charts)"
It’s not gold you should be hoarding…it is liquor and cigarettes.
That will be the currency of the future.
Good morning Bryan,
Why so glum? Where we have gone wrong?!?! I dont get it?!?! We have exported our manufacturing, imported cheap labor, sold out to China for everything else, printed gobs of money and given it to people for houses and cars who cant/wont hold a job and therefore will never pay it back, lent money to our college graduates, who are lazy, entitled and come out after 4 years, dumber than a box of hammers and will spend a lifetime paying it back from working at Chili’s…….I dont understand…what could go wrong?!? Why buy gold again?!? : }
Seriously though….I do wonder what will happen when the curtain finally drops and this “fugazi” financial pyramid scheme is finally exposed. I dont know if gold will be enough….what will be the new currency? …..brass and lead?
Take care, Matt
Reminding us of Gold is relevant, but there are deep aspects that escape the usual view. Consider {although you need a translator into Russian) for example the website https://wsboh.org/ru/documents_rus/ with some delicious surprises on the way towards a more peaceful world.
Best analysis since I have been following you. As The Original Gold Bug’s Jim Dines student and mentor I completely agree. All you have to see is that the Central Banks now hold more Gold than U S treasury bonds. They know the gig is up and the Fourth Turning is progressing the way it wants to. Fiat money will forever be changed in our lifetimes!