The current bull market in gold and silver is believed to be the final one before a major monetary reset, continuing until the collapse or replacement of the current fiat currency system.
In a future currency reset, holders of physical gold or silver will likely retain their wealth, while those with fiat financial assets may face severe losses or limited convertibility.
A recent silver price spike to $37 is considered just the beginning, with a 30% chance of reaching $40 in the next couple of weeks, followed by an expected market pause.
The silver bull market is driven by a supply deficit, with industrial consumption, especially in the electrical industry, outpacing mining production.
The US government’s debt to GDP ratio is projected to rise from 100% to 150% over the next 10-15 years, according to the CBO’s January 2025 forecast.
The US government’s interest rate on national debt is expected to increase from 2.8% to 3.3% over the next decade, despite the cheapest available rate being 4.4%.
China’s reduced gold purchases may indicate price sensitivity or secretive buying to avoid influencing the gold market.
COMEX delivery notices for gold and silver in January-May were 700% above last year’s levels, suggesting a major buyer is removing gold from the exchange.
China has amassed over 20,000 tons of gold since 1983, becoming the world’s largest gold miner and building its own gold pricing infrastructure in Shanghai to insulate itself from a potential US debt collapse.
The Shanghai Gold Exchange is opening vaults in Hong Kong and Saudi Arabia, allowing foreign traders to participate directly in gold futures and internationalize the yuan as a global settlement currency.
China’s long-term strategy aims to establish a new gold-backed settlement system, potentially pegging the yuan to gold and replacing the dollar as the global reserve currency.
The US dollar is in its “final death throes” as the global settlement currency, with its credibility undermined by the weaponization of fiat currency assets during the Ukraine conflict.
The US Treasury’s inability to fund itself through treasury issuance and the Fed’s monetization of debt are major concerns, signaling a growing US debt trap.
The global debt trap is not limited to the US, with many countries facing situations where debt is growing faster than GDP, leading to potential economic instability.
Central banks, including the Bank of Japan, Fed, ECB, and Bank of England, have poor balance sheets with losses 40,000 times greater than equity, indicating a system-wide instability.
A crisis in the gold leasing game has emerged, with central banks realizing they may not recover gold leased at 1% in the 1980s and 1990s for dollar investments.
Gold and silver prices are beginning to rise due to the Shanghai Gold Exchange controlling pricing and Chinese accumulation, with China being the dominant player in the physical market.
China’s gold-backed trade system will allow gold to flow in and out against payments in yuan, potentially involving other nations but stipulating the use of Chinese yuan for exchanges.
The dollar’s decline is making it less attractive for foreign investment, with other currencies expected to follow, undermining the value of fiat currency measured against “real legal money without counterparty risk.”
As the global fiat currency system unravels, a new monetary order may emerge with the yuan potentially pegged to gold, while the dollar and other fiat currencies depreciate.
The US dollar-centric system is fading, with evidence in Asian headlines, but will likely extend in a radically different form due to the lack of a ready replacement.
Inequality within the US and between countries is causing the collapse of the dollar system, necessitating adaptation and potential re-industrialization.
The US is exploring a Bitcoin strategic reserve and dollar stable coins as vehicles for leveraging up and creating a new trading framework to renegotiate the global system in real time.
The US is likely to return to neo-mercantilism, prioritizing America Inc. over markets and profits to address inequality, de-industrialization, and Pentagon supply chain issues.
This shift requires a focus on physical investment in infrastructure and capital stock, such as AI, robotics, and factories, to re-industrialize and potentially become the world’s most powerful emerging market.
Gunship diplomacy may be used to enforce balanced trade and industrialization on other countries, utilizing the dollar, stable coins, and Bitcoin.
The emerging multipolar world is characterized by the rise of regional economic blocks, with the US block (North America, Canada, Mexico) being the most defined.
The Chinese block is more uncertain, potentially including Russia, India, Japan, and Southeast Asia, but not yet economically equal to the US.
The current system sees the top 1-2 income deciles in every country getting nearly all the economic benefits, which is unsustainable and requires reduction of the income gap.
A new system would require a reduction in inequality between countries, focusing on balanced relationships and value-added industries.
Current political parties are not fully cognizant of all problems and unable to express necessary trade-offs to the populace, hindering effective implementation of neo-mercantilist policies.
A new narrative is needed to explain the confluence of issues and required trade-offs, as current narratives fail to address the complexity of the situation.
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