As Expected Gold Price Tumbles, But Excessive Regulations on The Global Economy Still Remain, The Gold Buying Opportunity of Lifetime I’ve Been Writing About Might Be On Its Way, Reasons Explained – January 29, 2022,
I comprehend that most people reading this will try to comprehend my angle on all of this, truth be told I’m a long-term investor, I don’t consider fiat money real money, I’m pro Gold and Silver but anti-Gold Standard why? Because I’m a firm believer in financial education.
I personally believe the best democracy is the marketplace not in the political arena and currently, worldwide I’d say only 2% of the global population understand the BASICS fundamentals of our financial system, meaning that during periods in which the only answer is austerity, the major of people using their preferred politician will vote for CONFISCATION. Don’t imagine this a republic or Democrat, Liberal or Conservative argument. It was Nixon who took us off the Gold Standard, it was Donald Trump who first sent Americans free government check in the mail to stay home and openly suggested that he’d like to know more about Negative Interest Rates.
Now would you really want a Gold Standard with idiots like this in charge of life? I think not, I prefer using fiat money until more humans understand liberty, I don’t subscribe to this notion that fixing the money will change the minds of the people. Poverty starts in the mind and whether the money is backed by Gold and Silver, Bitcoin or wheat, water, sand, etc. the poverty state of mind will haunt people who don’t understand that “wealth” or being a wealthy person is a state of mind.
Understanding the aforementioned, it’s a lot easier to comprehend why the markets would rather the price of Gold and Silver retreat. Where I think is going to happen is that the COST of living going to push up the fiat prices of things, whereas most people in the markets, genuinely imagine deflationary consumer prices will occur when the federal reserve raises interest rates.
The cost of doing business has gone up and it can’t come down, I’d argue for at least the next 3 years. Making matters worse is the DEBT, people want to pretend that there are all of these U.S dollars slushing around, sure? Debt-based dollars are flushing around the economy, but as consumer prices rise, that debt will by fewer goods and services, which the way I see it, equates to more potential bankruptcies or BAILOUTs during an ECONOMY that’s deflating.
Now if we had a Gold Standard consumer price deflation and economic deflation would be tied together. What we have in the modern era is a fiat monetary system, based on debt. This system separates economic deflation and consumer prices. In this system when the economy starts to deflate, the political classes print money, now the people who don’t understand the Forex markets, assume that printing money in this modern fiat standard is the same as printing money under a Gold Standard, it’s NOT!
In this system, the U.S dollar which is a debt-based fiat dollar has other countries selling their own currencies to enjoy the price stability of the U.S dollar. This is why holding the U.S dollar often helps people living outside of the United States. In Canada, where I live, our government is more bloated than most people imagine it to be. We fudge the numbers in Canada probably more so than the American government fidges the numbers, but you’d only know that if you recognized the “private” entities in Canada tied to the Canadian government.
So via debasement, the U.S dollar can serve to help governments of certain countries. This of course equates to the price of Gold and Silver potentially sliding, until it meets with resistance, where will this resistance occur? Once the markets realize that Mainstreet can’t LOWER consumer prices. I 100% agree that price controls could happen in the very near future, the problem with price controls is that market counters price controls by being LESS PRODUCTIVE.
We already have SHORTAGES in the economy, Labour unions believe in wage controls(btw wages are usually highly-taxed prices, meaning unions are special interest groups for the government) I’ve worked for labor unions and non-labor unions companies, the companies with labor unions are usually less productive, why? Because via the political system, the people working for unions know that the owner of the business will have a hard time firing them if they can prove that they’re doing the best job they can do.
Resources get squandered when the productive are at the mercy of the unproductive, in the scenario I’m describing the Government represents the unproductive and the market represents the productive. The market is waiting to come roaring back but the government has presented the markets with all sorts of hurdles and hoops TO JUMP OVER or into. In the financial community, most people ONLY LOOK AT THE NUMBERS, or historical data or trends, what I believe is going to happen has never happened in my lifetime or even the lifetimes of people much older than I am.
Now, the people who can see what’s happening if they have a public spotlight are wise to keep their mouths shut, because it’s not like Gold and Silver will be the only beneficiaries of what’s to come, it’s just that Gold and Silver have no counterparty risk.
Maybe you like fiat denominated gains, are you’re looking to purchase assets you imagine will be cash flow positive in the future, nothing is certain, why speak out about it? Now I can’t be sure as to what’s about to happen, but what I do know is that I don’t see regulatory policy changing for the better anytime soon and that screams CONSUMER PRICE INFLATION.
The U.S government is already flooding some parents with money, what consumer price inflation equates to is money buying fewer goods and services, so sure, the more wealthy families might not notice the difference, but the poorer families will and this is why I see the potential for bankruptcies mounting while interest rates are near zero.
I believe as consumer prices rise, so will Gold and Silver prices, and they’ll rise upwards nonstop until it becomes apparent that austerity measures are the only way out of this mess. The shrinking government allows consumer prices to shrink but depending on how long it takes for this to happen all sorts of economic damage may have already occurred. Knowing that most people will blame capitalism, is why you shouldn’t want a Gold or Silver Standard.
If Gold and Silver are considered ornaments, that’s perfect! If the government wants to enact policies for its fiat currency, go right ahead, this is often how alternative markets are created, I don’t bash Bitcoin for this very reason, it’s not that I like cryptocurrencies, but I do like options, I like gift cards that are easily barterable or communicating with people from the community that have skills I don’t posses.
Tyranny spreads quickly and when it happens you want to have a wealthy state of mind, so you can be as flexible as possible when the central planners really start screwing things up. With that said, it would not surprise me if this is the gold buying opportunity of a lifetime as threats of hiking interest rates equate to the markets assuming that consumer price inflation will come next.
Interesting times ahead!