Written by Bryan Lutz, Editor at Dollarcollapse.com:
Here we are…
The first Sunday of 2025.
Unfortunately, only one of these little thoughts has anything to do with the new year, but that one little thought is about gold. So, no loss.
Sometimes these thoughts are on the economy, life, or hard assets.
If they’re helpful or hopeful to you, that’s great… Sometimes it just comes down to reality. That’s what I’m interested in…
So, here we go.
Here are three Sunday morning thoughts for you:
1. Families earning a 6-figure income is becoming normal. Is that because there are more educated, high-value Americans in workforce?
Curiously enough, families earning a 6-figure income are becoming more normal than ever.
Sure, there are factors like more women going to work.
And then there are other contributing factors like the division of labor. There are more individualized, specific jobs. Jobs that range from farming to programming the neural network of machine learning matrices.
Every time a job becomes more specific and sophisticated, the worker’s part in the value chain of production become more valuable.
So they get paid more.
When you look at this chart those seem like a reasonable conclusions.
It’s reasonable until you chart ‘Median Family Income’ alongside ‘Total Public Debt.’
Then you can see how the two are correlated.
It appears that a little bit of stimulus did increase income for some time.
Slowly the gap widened.
Total Public Debt lagged behind until 2010 when the Federal Reserve kicked the money printer into high gear with quantitative easing(QE).
Now, Total Public Debt is about to outpace income at a rapid pace.
Forget about the division of labor and women in the workforce. The Keynesian theory that short-term stimulus makes the financial tide rise for all proves itself wrong in the long-term.
The federal government’s use of debt to stimulat the economy is already out-of-control. Eventually, with more stimulus, debt will overtake the median family income.
2. The USD is at its highest divergence from a fair value price ever. And that means, the USD is at its strongest ever. Except for one thing…
Over the last 4 years, the dollar’s divergence from fair value has increased 18%.
Since, November 2022 the USD index, the DXY has risen more than 21%.
For some, that is strong indicator that the dollar is here to stay.
For others, when they see the word “fair value” of currency, they know that it’s completely subjective.
When it comes to fiat currencies, what does “fair value” even mean?
A fiat currencies value comes only from comparison.
And the comparison you see in the chart above is based on what people perceive as a better deal.
That is, until debt, and interest on debt goes parabolic, which further drives the dollar’s divergence up and up…
Until, the subjective value of a dollar could become completely immeasurable.
3. Here’s what gold vs the classic 60/40 portfolio looks like going into 2025. Gold is a shining star.
The technicals show gold breaking out of a 14-year cup and handle pattern, while the old 60/40 portfolio seems to be flatlining.
And that means, gold prices are headed for the next leg of profits in 2025.
All the factors of gold’s rising prices aren’t specifically dependent on the Fed lowering interest rates, but it has been a major driver.
It’s something Dave Skarica, Editor, of our premium video gold and silver stock advisory, surmised about this time last year.
That was before the Fed gave any thought to lowering interest rates. He put together his portfolio.
We have only removed one stock, which was stagnating at 0% gains for three months.
All others have prospered from 35% gains up to 175%, because of his investment thesis, and more…
