A GOLD CRASH?

 

Gold briefly touched $5600 and then plunged in 48 hours all the way down to $4800.  An historic plunge unmatched in dollar terms, marking extreme volatility for this supposed safe haven asset.

On the other hand, you could say that over the course of the last year gold has moved steadily from $2500 to $4800 with brief bouts of weekly volatility.  Like almost every other asset during every other period in history.

It all depends on your time frame.

If you are a gold trader and you got in recently - well you got whacked.  The moral is: don't trade gold.  Unless you are trading for a central bank or a bullion bank you're out of your league.  

If  you are a gold investor and you've been in for the long haul, this is barely a hiccup.  If you're a new gold investor just hang in there.  Every condition that has been driving gold up over time is not only in place but intensifying.

Debt is spriraling out of control everywhere and especially in the United States.  Federal debt is growing at a trillion dollars every 100 days.  And consumer debt is at all time highs and growing rapidly.  Consider this: GDP is rising while real wages are falling!!!  GDP simply measures SPENDING.   So spending is rising while wages are falling.  What bridges that gap? DEBT.

Deglobalization is intensifying.  Those who only consider only the trade deficit think this a great.  But anyone who considers the other side of the balance sheet - the CAPITAL ACCOUNT DEFICIT knows this is a disaster for real inflation.  Just as it is a disaster for the value of the dollar.  Those 2 sentences mean the same thing.

And geopolitical tension are boiling.  The country is being torn apart by hatred.  Just as we are attacking enemies and one time allies alike, riving the world with hatred.

Those who celebrate this as the Neo Mercantalism and the rise of a realpolitik are missing s most important point about mercantalism which is this: There was a give and take to the colonial system that fueled 19th century mercantalism.  It may have had brutal aspects but colonializing powers often brought some stability to target areas: they brought industry and paved roads and schools and brought vaccines and modern medicine and hospitals and clean water, and electricity, just as they seized natural resources, and exploited native populations.  This worked for all parties to some extent.  The NEW 21st century MERCANTILISM is closer to neolithic barbarism seeking to bring nothing and take everything from rivals.  And everyone is a potential rival.  This brings nothing but instability everywhere.

So what has changed to bring the gold price a bit lower?  Nothing.  It's a market.  Markets are volatile because human appetites are volatile.

Only fools and those with a very real knowledge/power/monetary advantage seek to trade them.

So invest, and hold on, as long as the underlying conditons are intensifying.

GOLD $5000 - what next?

The market loves round number milestones.  Gold $5000 is just that.  It's getting a lot of media attention now and everyone's wondering - what's next?

You can look at the gold price through many historical lenses - price to S and P shares - price to federal debt, price to total debt.  All these stories show gold is not really at historically high levels since the massive US debt bubble is outpacing the price of gold and stoking the value of equities as well as hard assets.

You can view the gold price through technical lenses (RSI, stochastics, commitment of trader reports etc) and conclude that gold is quite overbought after all, it has rallied over 60 percent in one year.  Surely we're in for a steep correction?

But really, to understand the gold trade you have to understand a fundemental shift in global markets that has taken place over the last few years.  And this shift involves gold's return from  being traded as a commodity ever since the monetary gold standard was broken back in 1971,  back to being a monetary metal as it had been from about 6000 BCE to 1971 AD.

How do we know sgold has been transformed back into a monetary metal?

For one thing the central banks of the world = especially China, Russia, Eastern Europe, South East Asia, Central Asia - and the BRIC nations are telling us this.

But if you want harder proof - since it is very hard to accurately gauge central bank buying - you need only look at the STAND FOR DELIVERY statistics available at all western gold exchanges.

At the Comex - Every single contract month in 2025 set delivery records. February (an inactive month) saw 15,500 contracts delivered—unprecedented for a non-traditional delivery month. April delivered 18,200. June hit 21,800. October’s active contract exploded to 58,061 contracts ($23.5 billion notional) through October 22 alone. December, while final data awaits publication, appears to have cleared approximately 27,000 contracts—surpassing December 2024’s then-record 25,642.

This shows that even as the gold price shot higher, the appetite for physical bullion of the largest, wealthiest buyers in world grew ever greater.  Real gold bullion is being accumulated by Central Banks, Hedge Funds, Sovereign Wealth Funds, and Billionaire Concierge vaults.  And the stand for delivery contracts make it impossible for the traditional bullion banks to control the gold price by dominating the paper trade as they have done for the last 50 years.

Now the reason for this transformation is not widely understood.  But it is clear.  It is sometimes called tbe debasement trade.  This means that as the debts of all nations soar the respective governments compete in inflating the value of the debt away making all fiat currencies worth less and less vis a vis real things.  Such as gold.  And this debt is compounding and increasing at an alarming rate.  In fact such an alarming rate that the world's wealthy are now responding by shifting their own reserves from paper to gold.

This is also called the Sell America Trade - because the predominant debt in the world is dollar denominated.  And our government is intensifying its spending needs through global conflict just as it is weaponizing the currency itself through confiscations, tarrifs, sanctions - and outright theft (such as the seizing of Russian treasuries and Iraqui oil profits held at the Fed.)  Thus all central banks are seeking to move away from dollar denominated debt to the only other Basel Tier 1 Reserve Asset: GOLD.

So as gold hits $5000 per ounce what could reverse these trends?

I can't see anything.

That doesn't mean gold goes straight up from here.

But it also doesn't mean there is any good reason it shouldn't over time, other than the recency bias of looking back to see how it traded for 50 years as a pure commodity.

SOME RECENT GOLD PRICES: 1/20/26

RETAIL BULLION GOLD EAGLE AT APMEX: Nearly $5000 $4,958.19

1 oz American Gold Eagle Coin BU (Random Year)

    

Top Pick 

$4,958.19

 

GEM MINT KROISOS STATER: (world's first gold coins)

$440,000 USD

LYDIAN KINGDOM. Croesus (561-546 BC). AV stater (16mm, 10.77 gm). NGC Gem MS★ 5/5 - 5/5, Fine Style. Croeseid "heavy" standard, Sardes, ca. 561-550 BC. Confronted foreparts of lion right (on left) and bull left (on right), each with outstretched foreleg / Two square punches of unequal size, side by side, with irregular interior surfaces. Rosen 660. BMC Lydia 30. Boston MFA 2068. Gulbenkian 756 (same dies). Berk "100 Greatest Ancient Coins," 9.1 (one same reverse die). Glistening in the light, this exceptional specimen boasts flawless preservation of the minute details in its Fine Style dies. The stoic bull and regal lion lack the animated expressions of the prototype dies it followed, showing the maturing style of the engravers. QUEEN ANNE GOLD PEACE OF UTRECHT MEDAL $165,000 Gold Medal 1713. Peace of Utrecht. By J. Croker. Bust, laureate and draped. ANNA . D : G : MAG : BRI : FR: ET . HIB : REG: Rv. Britannia seated with olive-branch, spear and shield; beyond ships and farming scene. COMPOSITIS . VENERANTVR . ARMIS. In exergue: MDCCXIII. Plain edge. 59.3 mm. 122.00 g. Eimer 458. MI ii 399/256. van Loon V, 230,1. Saunders/Vanhoudt 1713-9. Sehr selten / Very rare. Prachtexemplar / Cabinet piece. Vorzüglich-FDC / About Uncirculated. Great Britain: Victoria gold "Diamond Jubilee" Medal 1897 MS66 NGC,. Sold on Jan 12, 2026 for: $51,240.00 Amazing 10 ounce coin from 1609 Philip III, 1598-1621. 100 Escudos 1609, Segovia. PHILIPPVS · III · D · G Crowned shield. Aqueduct mint mark on the left. Value on the right / HISPANIARVM · REX · 1609 Spanish cross within quadrilobe. 339,35g. Calicó 1 (this coin); Cayón 5037; Cayón & Castán 1541. NGC AU58 (top pop). Lot 314 Starting price: 2 000 000 CHF Price realized: 2 300 000 CHF gorgeous augustus aureus GORGEOUS AUGUSTUS AUREUS AUGUSTUS AUREUS Price realized: 400 000 CHF  Find similar lots Share this lot:  ROMAN EMPIRE Augustus, 27 BC - 14 CE. Aureus circa 27-15, Pergamon (?). CAESAR Bare head right / Heifer walking left. 7,95g. Bahrfeldt 137; BMC 659; C 26; Calicó 168 (this specimen illustrated); CBN 1010; RIC 538.

Who can you believe? Believe Gold.

 

Even amongst those who believe whole heartedly that Gold is the only asset that will get you through this period of intense global chaos, there is intense disagreement about what is actually going on.

Half the gold community believes that chaos is emminating out of Washington D.C. right here in the US of A. seeking to distract the US public from a horendous affordability crisis and the moral decay of a Pedphile ring that reaches the White House.

The other half believes that the chaos is emminating out of the Russia, China Iran axis of evil and Washington is taking the appropriate steps to protect istself.

Either way, gold at $4500 and silver at $90 is telling you the chaos is real.

Half of the gold community believes that government sponsored jack booted thugs with face masks are terrorizing American cities.

The other half believes government agents are justly trying to right decades of a lax immigration policy.

Either way, gold at $4500 and silver at $90 is tellling you the situation is dire.

Half of the gold community believes that Major cities in the blue states are imploding with crime, violence and communism.

Those who actually live in those cities don't see any of these problems but believe that the Red States hatred for the blue states is blinding them into a frightening rage that is tearing the country apart and that this is all part of the distraction campaign,

Either way gold at $4500 and silver at $90 show that this rift is real and dire.

So no matter where you come down on this Great Divide perhaps the most concrete fact we can look to to gauge the crisis temperature is the price of gold.

And the one thing the gold community can agree on , no matter which side of the divide they reside, is that gold will preserve your own personal wealth during this ongoing and seemingly insoluable crisis.

Gold, Debt, and the Debasment Trade.

 

The net present value of  government debt in the US (including unfunded liabilities like Military Pensions, Government pensions, Social Security, Medicaid, etc) is over 150 trillion dollars.

The value of all private net worth in the US - including real estate, stocks, bonds, hard assets, is around 150 trillion dollars.  

But government debt is growing at a much faster rate than the value of private assets.

In a globalized world - for all its problems - the inflationary fallout from first world economies fueled by debt financing is masked by complex supply lines that source materials and labor from all over the globe.  This masks incipient inflation.

When you reverse globalization before addressing the debt problem you unleash a rabid inflation that destroys the value of all paper currencies.

The world powers are left with two options.

1) they can simply default on their debt.  This would lead to dramatic economic collapse.

2) they can inflate away the the net present value of thei debt obligations while continuing to honor the nominal value.  This results in what is now being called the DEBASEMENT TRADE.

When every country must address their debt problems by debasing their currency the only winner is the value of Monetary Metals.  Primarily this is GOLD.  Though it would seem the Chinese are attempting to add Silver to their monetary reserves.

The US has a unique problem/privilege in that we have the resereve currency - which means that large global commodity trades - like oil - are settled in US dollars.  Thus everyone needs dollars to settle trades and they park excess dollars in our debt thus subsidizing our debt keeping our rates low, and limiting our inflation.

But as the world deglobalises and the US scrambles to inflate away our debt, the rest of the globe stops settling their commodity trades in dollars.  And they stop buying our debt.   Our rates rise, our inflation soars.  We have compounded this problem and vastly accelerated the Dedollarization trade by weaponizing our currency and our economy.  And as we militarize our global relationships and become an increasing military threat this again accelerates the global move away from the dollar as a settlement currency.

Now, dollar permabulls like the Dollar Milkshake crowd will point out - correctly - that over 70 percent of global debt is denominated in US dollars - so everyone needs dollars to refinance their debt.  This is true - and irreversible.  But you can need to refinance dollar denominated debt and still shun the dollar as an instrument to settle international trade.

Thus the dollar stops being useful as a reserve currency and acts solely as a short term debt instrument with no yield.  This is preceisely how it is viewed by the central banks of the world.

Obvioulsy this is complex if you are trading the value of the US dollar  vs other paper currencies.

But the direction of this reserve currency dedollarization trade is not complex.  

It is measured in the price of gold.

Because gold is the only other tier one Basel reserve asset besides the US dollar.

The price of gold has now become the barrometer of the health of the global paper reserve currency: the US dollar.

Now, as an investor you have two options.

1) you view this dedollarization debasement trade as a temporary phenomenon that will reverse over time.  

2) you view this dedollarization debasement trade as a trend that will continue until the primary global reserve currency is once again Gold - as it had been for all of human history until 1971.

Obviously these two scenarios require a vastly different investment philosophy.

Choose.  

If you choose option 2 there's not a lot of time left to organize a portfolio that will benefit from this scenario.

GOLD: DEBT IS THE GREATEST GEOPOLITICAL RISK

 

Recent events in Venezuela and subsequent US threats to repeat similar attacks against Mexico, Denmark, and Columbia have intensified talk about global geo-political risk.  Many commentators, not unreasonably, cite this as a reason for the high gold price. 

The aspect that oftens get overlooked is that war, and war-like military strikes are  enormously expensive.  When a country has national debts that far exceed GDP,  and yearly debt that exceeds tax receipts, all addtional military war-like activities must be financed by more DEBT.

Now, we can speculate that some time, off in the distant future, natural resource income from these strikes will help finance these warlike activities.  It may.  It may not.  Just as the over 600 bombing runs in seven countries we have conducted this year, may or may not bring strategic dividends, but they bring in no money and cost hundreds of billions of dollars.

In the short and medium term - over the next several years - we are adding these many hundreds of billions to a debt burden that is already a tremendous national security threat.  

How so?

Because the more warlike the activity, it is ever less likely that our one-time allies - many of whom are now under either implied or direct threat - are ever less likely to participate in our debt auctions.  This goes too for rivals/enemies like China, who only a few short years ago was the principal purchaser of our debt.

Especially now that our debt itself has been weaponized through confiscations, sanctions and tarrifs.

Who does that leave to buy our ever-spiraling debt?

US banks, who are subsidized in their purchaes by the FED.  This is non-QE QE.  And the Fed buying the debt directly.  This is QE. 

All of which is tremendously inflationary.  Especially since nobody will buy our long dated debt so we have to issue all of our debt at the very short end - which is just like printing cash.

This is what is being referred to as the debasement trade.  War is an accelerant.

The disrupted supply lines resulting from the war-like activity activity are also inflationary.  Even if we predict that some time in the distant future some commodities may be cheaper because of our actions.

Unfortunately this most dramatic national security threat seems to be unrecognized by our government.  And by most US citizens.  Everyone is aware of the crippling inflation (or 'cost-of living' as inflation is now a forbidden word.)  " But not one in man in a million is able to diagnose" the casuse: John Maynard Keynes.

It is, however not lost on the Central Banks of the global economy.   That is why the price of gold, silver, copper, platinum and agricultural commodities continues to rise and rise and rise.

This debt is our greatest national security and geopolitical risk, the price of these commodities will continue to rise and rise and rise.

LISTEN TO GOLD

 

Gold is now at about $4500 per ounce.

To understand whether's it's still a good buy at this price you have to understand what gold is telling us.

To understand gold you have to understand that first and foremost gold is an instability hedge.

People hate this explanation because it can't be easily quantified.  But STABILITY is what makes gold money:

Gold is the only element that is completely inert.  That is to say it is completely stable.  It nevers tarnishes. or rusts or decomposes or alters its fundemental state.  It is stable.  Even when split into ever small quantities.  And in an ever changing world that is indeed a unique charactersitic.

If you go out on the open market you can purchase a Greek Gold Stater of Alexander the Great in mint state.  It will look exactly as it did 2500 years ago.  It will weigh exactly the same. (in lesser condition the gold is still exactly the same but the images engraved on it are degraded.) And, most amazing, it's purchasing power per ounce is quite similar to what it was 2500 years ago.

As everything around changes, gold is the economic constant in our world.  

In 1971 Richard Nixon took that world off the gold standard of money and issued in the age of Debt Financialization.  This has produced a debt binge that has taken the world eonomy to the brink of an epic collapse.

If you listen to Gold.

If you listen to the economic pundits - whose job is to sell you on the health of the economy for economic/political reasons we're on the cusp of a golden age.

If you listen to gold we are about to enter a period of monetary reset during which all of the world's paper/debt currencies will lose most of their purchasing power vis a vis real goods.  In this view, there will be a monetary reset in which Gold will serve as the reserve for a gold/commodity backed settlement currency.

The Central Bankers in China, Russia, India, Viet Nam, Poland, Turkey, Brazil, Uzbekistan, Rumania, Indonesia, Gahna, and others understand this and they are buying gold in unprecedented amounts.  The sovereign wealth funds of Saudi Arabia and Qatar and Kuwait are also investing heavily into bullion gold.  And in the west, several private vaults are now catering to the Billionaire class willing to put at least 20 million into bullion gold.  These vaults are managed by ex fund managers from Black Rock, Morgan Stanley and Goldman Sachs among others,  In other words, investment pros who buy into the viablility of the Eastern view of a Gold-backed currency reset.

It would seem that the world is pretty evenly split right now between Westerners who believe the debt binge can continue for ever and Easterners who believe that Gold is now the ultimate reserve currency.

The Eastern buying binge is driving the gold price ever higher. Most of the gold price move is still caused by Eastern Central Banks but at the margins others are investing in this world view.

They believe the debt binge has reached a critical level of instability.  And they are looking to inflate away their paper/debt in relation to their ever growing gold/money reserve.  

The Western economies seem content to grow their debt indefinitely.  Their new scheme is to use Stable coins platforms to invest in a massive increase in short term US debt.  This is artificial QE on steroids.  If that seems like a great idea maybe buy crypto.

No one can say for sure how this dichotomy will play out in the short run.

But at $4500 per ounce  there's not much time left to protect yourself if you decide the Eastern Central Bank view is worth some of your hard earned currency.