All those countries that want to sell their dollar reserve holdings of Treasuries have found gold to be an attractive alternative. Thus expect the gold price to keep rising (with setbacks and some volatility). A gold price of $ 10,000 per ounce seems quite plausible to me. Even banks are likely to join the incipient stampede to buy gold: The Basel regime now allows banks to hold gold as Tier 1 capital, while investment funds, holding most of people’s pension investments, are largely not allowed to buy gold.
Since nobody argues that the current trajectory of US national debt is in any way sustainable, it is only a question of time when more and more investors will abandon the Treasury market. Since US Treasuries are considered one of the “riskfree” assets in valuation models as well as in regulatory requirements for banks and other financial institutions, a sharp drop in the price of Treasuries would have significant ramifications across global financial markets. It is true that US Treasuries strictly speaking to do not carry a risk of default – since unlike many other countries, all US borrowing takes place in US dollars and those can be created by the Federal Reserve. However, at one stage, as Fed purchases will swell the Fed balance sheet so much that it likely will have to stop buying them. Then bond prices will fall and US interest rates will rise. That scenario is however still removed by more than a year.
For now what matters is that an increasing number of former buyers of US dollars and US Treasuries are switching to gold. To delay such a scenario as much as possible, the deep state agencies, likely the NSA and CIA, had developed Bitcoin. It also explains why Bitcoin and some other alt cryptocurrencies have been favoured by establishment media such as the Financial Times, Reuters and Bloomberg, providing prominent coverage: A key role of such cryptocurrencies has been to take up some of the buying pressure on the gold market and provide an outlet through investments in the alleged “digital gold”. But make no mistake, only physical gold is the real deal. All else is credit.
I conclude then that in my assessment the ongoing and accelerating switch of sovereign investors from US Treasuries to gold has likely been a key factor that enabled the gold price to break out of its somewhat artificial and suppressed prior price range.
Why did the dollar not fall? Well, it did, if measured in gold. Just like in the 1970s, it didn’t if measured in the Japanese yen and the euro, because the respective central banks have been creating money faster than the Fed. So the dollar is being propped up at the expense of captive dollar holders like Japan that have to debauch their currency. Treading on the maltreated body that is the Japanese economy, the dollar can stay afloat for the moment. But it is no longer backed by oil as much as it used to be: Saudi Arabia has joined the BRICS countries and their commitment to move away from the US dollar.
I also conclude that the gold price is likely to continue its steady rise to new record highs, for years to come. As the monetary manipulations of the 1970s ushered in the petrodollar, so the present growing dislocations of the monetary system are engineered by the central planners to usher in the promising control tool that would allow the Fed and European central banks to recapture their control over the economy: Central Bank Digital Currencies. They would allow central planners to continue to overspend and create more and more money, while simply marking down everyone’s holdings and controlling inflation by quantitatively restricting the use of this potential or conditional money. That is, of course, another reason why we must do our best to prevent the introduction of CBDCs. Use cash and continue to build up your own reserves of physical gold, within easy physical reach.
All those countries that want to sell their dollar reserve holdings of Treasuries have found gold to be an attractive alternative. Thus expect the gold price to keep rising (with setbacks and some volatility). A gold price of $ 10,000 per ounce seems quite plausible to me. Even banks are likely to join the incipient stampede to buy gold: The Basel regime now allows banks to hold gold as Tier 1 capital, while investment funds, holding most of people’s pension investments, are largely not allowed to buy gold.
Since nobody argues that the current trajectory of US national debt is in any way sustainable, it is only a question of time when more and more investors will abandon the Treasury market. Since US Treasuries are considered one of the “riskfree” assets in valuation models as well as in regulatory requirements for banks and other financial institutions, a sharp drop in the price of Treasuries would have significant ramifications across global financial markets. It is true that US Treasuries strictly speaking to do not carry a risk of default – since unlike many other countries, all US borrowing takes place in US dollars and those can be created by the Federal Reserve. However, at one stage, as Fed purchases will swell the Fed balance sheet so much that it likely will have to stop buying them. Then bond prices will fall and US interest rates will rise. That scenario is however still removed by more than a year.
For now what matters is that an increasing number of former buyers of US dollars and US Treasuries are switching to gold. To delay such a scenario as much as possible, the deep state agencies, likely the NSA and CIA, had developed Bitcoin. It also explains why Bitcoin and some other alt cryptocurrencies have been favoured by establishment media such as the Financial Times, Reuters and Bloomberg, providing prominent coverage: A key role of such cryptocurrencies has been to take up some of the buying pressure on the gold market and provide an outlet through investments in the alleged “digital gold”. But make no mistake, only physical gold is the real deal. All else is credit.
I conclude then that in my assessment the ongoing and accelerating switch of sovereign investors from US Treasuries to gold has likely been a key factor that enabled the gold price to break out of its somewhat artificial and suppressed prior price range.
Why did the dollar not fall? Well, it did, if measured in gold. Just like in the 1970s, it didn’t if measured in the Japanese yen and the euro, because the respective central banks have been creating money faster than the Fed. So the dollar is being propped up at the expense of captive dollar holders like Japan that have to debauch their currency. Treading on the maltreated body that is the Japanese economy, the dollar can stay afloat for the moment. But it is no longer backed by oil as much as it used to be: Saudi Arabia has joined the BRICS countries and their commitment to move away from the US dollar.
I also conclude that the gold price is likely to continue its steady rise to new record highs, for years to come. As the monetary manipulations of the 1970s ushered in the petrodollar, so the present growing dislocations of the monetary system are engineered by the central planners to usher in the promising control tool that would allow the Fed and European central banks to recapture their control over the economy: Central Bank Digital Currencies. They would allow central planners to continue to overspend and create more and more money, while simply marking down everyone’s holdings and controlling inflation by quantitatively restricting the use of this potential or conditional money. That is, of course, another reason why we must do our best to prevent the introduction of CBDCs. Use cash and continue to build up your own reserves of physical gold, within easy physical reach.
