THE BULLION PREMIUM STARTS TO MOVE - DON"T BE THE LAST ONE IN

1 oz American Gold Eagle Coin BU (Random Year)

Top Pick 

$3,047.89

GoldPrice. 
WHERE THE WORLD CHECKS THE GOLD PRICE

Holdings 

2,911.17

-9.02

-0.31%

Premium over spot gold: %4.6 

The above is the basic gold price for a quantity of US Gold Eagles at Apmex the largest US bullion dealer. The premium in historical terms is still quite low.  This tells us that despite the impressive run up in the gold price, very few Americans are buying gold.

It also tells us that this is currently changing.  The spread has widened a almost 2 percentage points in the last 2 weeks.

The US domestic economic situation it rapidly deteriorating.  All those who thought that Tarrifs were simply a clever bargaining ploy have been proven wrong.  They are now premanent policy.  And they accomplish three important things for GOLD.

1) They are highly inflationary, as they are paid for almost entirely by American business and consumers.

2) They are a massive drag on business activity and economic growth.  These two factors spell Stagflation, which has entered the vocabulary of almost every economist not employed by the current administration.

3) Perhaps most important for Gold: Tarrifs weaponize the US dollar thus destroying the usefulness of the US dollar as a reserve currency. 

Even as the US was running a current account deficit (trade deficit) we were also running a commensurate financial account surplus.  This meant that while other countries sold us goods they also bought the US dollar which they then recycled into US DEBT thus financing the US lifestyle, keeping goods cheap, inflation under control and growth humming.

This game is DEAD.

And the only beneficiary is gold.  Every Central Bank in the world now understands this.  The central banks of the world are selling US debt and buying GOLD.

At some point the US consumer will catch on to this new game.  Then Gold will really move.

Don't be the last to catch on.

 

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THE NEW GOLDEN AGE: THE AGE OF GOLD

If this is a GOLDEN AGE I would think that term should be taken most literally, the one asset everone should hold is gold:

A Trade War is bad news for  everyone in the global economy.  I know there a many who would wish that it were otherwise.  But trade wars slow global growth and raise global prices.  That is true for every economy.  Especially the United States because so many of our companies are multinational.  And so many of our products of choice are imported.

Every dollar raised by Tarrifs are raised from the American Consumer.  This makes everyone who is not a billionaire poorer.  Billionaires are excepted because it makes no difference to them if a car is 40 or 50 or 60 or 150,000 dollars.  It's just not an amount large enough to matter.

If you are not in that catagory, you need to protect yourself now.

If you don't believe me look at the data:

ISM: The new orders index fell to 48.6 from 55.1 in January. The prices index jumped to 62.4, up from 54.9 in January.

Atlanta Fed GDP revision; Last wednesday Atlanta Fed GDP estimate stood at %2.5.  Friday it was revised to NEGATIVE %1.5.  

Unit Sales for consumers have been decreasing for the last year.

Consumer sentiment has fallen sharply the last 2 months:

Bloomberg: Consumer Sentiment Plummets to 15-Month Low Amid Tariff, Inflation Worries

Inflation expectation has increased sharply the last 2 months.

Bloomberg: US Consumers Long-Run Inflation Views Rise to Highest Since 1995

US consumers' long-term inflation expectations rose to the highest level in almost three decades on concerns President Donald Trump's economic agenda.

Annualized CPI currently stands at 4.8 percent.  (not close to the 2 percent the Fed needs to start easing)

Credit spreads have started to widen noticeably:

Bloomberg: "Global corporate bond spreads have widened for eight trading sessions in a row, ending a period of remarkable tranquility, as investors start to turn defensive amid fears about the impact of tariffs."

And today the ADP employment report which is much more reliable than the BLS report showed 77,000 new jobs created in Feb.  That is against an estimate of 140,000.

It's early days in this Trade War.  The effects are only just beginning to be felt. Wait until the tax cuts blow a massive hole in the budget.  Then our debt requirements will blow out at the exact same time our economy is slowing and prices are rising.

That's when you'll really need gold.  But by then it may be difficult to find.

ISM GIVES FIRST CONFIRMATION OF STAGFLATION:

 

Institute for Supply Management’s Purchasing Mangers Index slipped to a reading of 50.3 in February, below economists' expectations at 50.5, according to FactSet. The new orders index fell to 48.6 from 55.1 in January. The prices index jumped to 62.4, up from 54.9 in January.

This if the first real confirmation that the regime of firing, deportations, and Tarrifs are creating an environment of slow growth and high prices.

Throw in an extra 5 trillion dollars of new debt from tax cuts for the top 1 percent and you get the perfect storm.

This is otherwise called STAGFLATION.

It is impossible for the Fed to combat stagfation.  If they attack the slow growth by loosening monetary conditions,  inflation carreens out of control

If they attack inflation by tightening monetary conditions, the economy could spin into a depression.

This wound is entirely self inflicted.

Yet once the geers are in motion it is very difficult to stop them from griding on into oblivion.

Of course, there seems to be no interest in turning things around.  According to the current administration there is no inflation except that which was caused by the previous administration, and growth is entering into a GOLDEN AGE.

Sounds good.  If you're holding a cellar full of gold.

WHERE DOES GOLD GO FROM HERE?

 

POSTIVE MACRO FOR GOLD:

a) Deficits.  Deficits drive inflation and slow growth.  Great for Gold.  

5 TRILLION DOLLARS IN ADDITIONAL DEFICITS have been promised through tax cuts on the wealthy.  This will pass and no amount of cutting pennies off government salaries or aid to the needy will even begin to offset this.  Neither will increased GDP.  

When Reagan cut taxes in 1980 the top marginal tax rate was 90 percent and the US was a surplus nation.  Each dollar of resultant debt could expect to produce 2 and a half dollars of GDP.  That was supply side economics.

Today the top marginal tax rate is 37 percent (And with loopholes closer to 17 percent) and the US is one of the world's largest debtor nations.  It now takes 4 dollars of addtional debt to create 1 dollar of GDP.  If you have 6th grade math you could figure out the efficacy of that plan.

GREAT FOR GOLD.

B) TARIFFS.  Tarrifs are highly inflationary.  First they make goods more expensive.  Second they destroy supply chains.  Third, they induce retalliatory tarrifs. Fourth: They immediately increase INFLATION EXPECTATIONS.

You can argue that applied with precision within a grand master plan they eventually will help onshore businesses and add jobs.  You can argue that.  This is a long term prospect that may or may not occur.  In the short run in an environment where most middle class families are deeply underwater - those families can expect much harder times ahead.  And they do expect that - just look at the inflation expectation component of consumer confidence.   It's through the

And inflation expectation causes inflation.

GREAT FOR GOLD.

c) GEOPOLOTICAL CONFUSION AND PANIC.

Most people don't realize that gold is a STABILITY HEDGE.  The more unstable events appear to be the higher the price of gold.  Right now we are in an historically unstable period.  Who are our allies?  Not Europe,   Not other democracies.  Not Nato.  Not Canada.  Russia?  The Nazi Party in Germany?  The fascists in Yoguslavia?  Not China.  Though China is the major ally of our new allies.  When Russia buddies up to us are they doing so on behalf of China?  What does that mean?  Does it mean anything?  What about Saudi Arabia?  They're settling oil with China outside the dollar.  What about the Belt Road initiative?  Trump's threatened tarrifs on anyone involved but nobody seems to care.  In fact the Belt Road Initiative exists to combat just such threats.  So what does the mean over time?

Nobody F-ing knows!  All we know if the situation is entirely unstable.

GREAT FOR GOLD

MASSIVE CENTRAL BANK BUYING.  Central bank buying all around the globe in response to the massively unstable economic and political environment in the US is accelerating.  Most central banks are selling US debt and  buying gold to use as their principle Tier 1 Reserve Asset.  The more unstable the US appears to them the more this trend continues.  (I know - to some of us here the US appears to be in great shape.  Exceptional.  Incredible.  But we don't run the other centtral banks for the world.  It's only really relevant as to what they think.)

GREAT FOR GOLD

NEGATIVES FOR GOLD:  A massive price run up without much of a breather from months and month.  Everything, no matter how big the bull market, must take a breather now and then.  When it comes don't let it knock you out of your position.  This is an historic bull.  Hang on for dear life.

The other negative for gold: the US public just doesn't see any of the above.  They think everything is just fine,  Better than fine.  They think Gold has a plan for us and we will prosper with HIS BLESSING.

At some point they may want to suplement HIS BLESSING with a little gold.

Then gold will really take off in dollar terms.

COMEX CRISIS: GOLD THROWS THE FED A CURVE

 

The unfolding drama of the comex being forced to deliver gold: something it was never meant to do, is creating the first crack in the Fed's Global Financial Dominance.

Ther comex was created expressly to control the price of gold.  As long as Fed-financed JP Morgan et alii were able to drop unlimited sell order on a paper market, the gold price was forever under the cotrol of the US Central Bank.

Since every other Central Bank has gold as its principal Basel Teir 1 reserve asset along with the US dollar - The Fed has tremendous power over the Global Economy - as it controls to a considerable extent the value of the US dollar and the value of Gold.

But everyone who followed the Gold market has wondered for some time: What happens when other central banks decide to take DELIVERY of the Comex contracts?

What happens to the price of gold?

We are in the prcoess of  seeing that unfold day to day right now.

Friday the Fed knocked the gold price down $50 in a day with a classic raid.  Monday and Tuesday - in stead of creaiting a short squeeze panic (something that has occured with regularity the last 40 years) - the price recovered.

But the other most intriguing question: What happens to the dollar - and the US hegemonic position as the only country to fund its own debt with a reserve currency - when other central banks drop US dominated debt in favor of uncontrolled GOLD as the Tier 1 reserve asset of choice?

That is something that is also playing out.  But at a slower pace and far behind the scenes with no real time measurement of the rate of change.

But one thing is for sure: despite the global move towards  protectionism and mercantalism: it is still a GLOBAL ECONOMY.

That genie is out of the bottle.  All comodity markets are now GLOBAL and are being settled outside the US dollar.

All suply chains are GLOBAL.

Every country can try to reverse this - but they will only succeed at the margins.

If China can supply a cheaper AI or a better Electric Car - no amount of Tarrifs or Sanctions will make a difference OVER TIME.  The best products will eventually dominate the market.

The only thing holding the US hegemony in tact (And the US inflation rate) was the Rerserve Status of the US dollar.

As that goes - so does our control over the Global Economy as well as our conrol over the Domestic Inflation rate.

Nobody's suggesing trends that has been in place for over 50 years will reverse over night.

But they are reversing.

Invest accordingly.

GOLD FLOWS EAST

 

While the Stand for Delivery Comex problem  has begun to receive attention in the financial press, there is an important aspect to it that is being largely ignored but which is crucial: the Stand for Delivery Contracts are from the East.

There is a steady flow of Gold now out of Western vaults into ther Vaults of China and the South-east Asian countries, Russia and the East European countries, and the Oil Rich Mid Eastern countries.

And this defines the entire move in the Gold Price thus far.

It used to be an adage that if you follow the flow of gold in the world you follow the flow of Political and Ecnomic power.  From Rome to Constantinople to Spain to France to Holland to England and then to the United States.

Now it is flowing East.  This is a very uncomfortable fact for those who are touting a new Golden Age for the United States, wherein China and Russia and their sattelites cower and kneel in awe of our might.  

Today, most Americans would argue that the flow of gold is no longer relevant in a financialized world wherein Currency is a form of Debt.  Wherein stock prices float ever higher on debt financed stock buy-back programs.  Wherein structural deficits grow ever larger as the billionaire class is subsidized by tax cuts and bailouts, and goverment sponsored contracts, while inflation destroys the purchasing power of the middle class.  

But it is worth wondering where this leads as the countries that are buying gold are doing so expressly in order to dump US debt out of their reserves and replace it with Gold.  

One place it leads is obvious: As our trading partners dump our debt, we will have to buy more and more of our own debt with printed dollars.  We will have to spend more and more to service our debt.  And we will have to exercise control of the long end of the yeild curve.  All of which is highly inflationary.

Meanwhile, we will be engaged in financial warfare with ever greater swathes of the globe, an exercise that is also highly inflationary.

At the same time both of these challenges are a major drag on growth.  Which is highly deflationary.

Over time, this will be a challenge to the New Golden Age.  

And these type of challenges tend to be structural and tend to last decades.

Once gold begins to flow in earnest from one are of the world to another - that trend tends to play out over long periods of time.

And remember: we have only been in this highly financialized world for a few decades.  

Another question to ask is what happens in a highly financialize world as global liquidity dries up and all the liquidity has to come from printed dollars injected by our own central bank?

That is exactly what we are about to find out.

It might be good to own some gold when we get our answer.  At least that's what the East seems to think.

COMEX IS BEING FORCED TO DELIVER GOLD: A CRISIS UNFOLDING

 

The comex has traditionally been a futures/credit market where contracts are settled before the delivery date, and large players like JP Morgan, financed by the Fed, could manipulate the gold and silver price simply by dropping huge quantities of contracts (especially shorts) that forced smaller players to cover their positions.  Then all the contracts would settle before delivery.

But since 2021 large players (unspecified) but many seeming to be from well financed Asian positions, have been taking delivery of the comex contracts.

Since 2021 these "Stand for Delivery" positions have steadily increased, and so far a total of over 2,100 TONNES of gold have been delivered.

But, since the beginning of this year there has been a considerable acceleration in the rate of stand for delivery contracts of gold, that has put a strain on the comex, and they have had to arrange for transatlantic flights from the London Bullion market to fulfill their delivery obligations.

This is true in both Silver and Gold.

These deliveries are supposed to be fulfilled in days.  Some contracts are not being delivered.  And there is a tremendous backlog of delivery contracts.

If the accerleration continues at this rate over 2,200 tonnes of gold will have to be delivered this year.  This is the total of the last three years.  The strain on the comex is at a point where a systemic crisis is in the making.  

If they cannot get the gold for delivery and contracts back up for months and months - which is happening now - the price of gold will skyrocket as sellers of physical will simply hold out for higher prices.

This delivery crisis is unfolding right now.

This doesn't mean the crisis won't be delayed as gold exchanges coordinate to resolve immediate delivery issues.

But the problem is being exacerbated by the fact that major Central Banks (China, Russia etc) and large oil backed sovereign wealth funds are buying most of the fresh supply of gold so that the western exchanges are having a difficult time of finding fresh supply.

And over  time, as more as more Stand for Delivery contracts are exercised, the potential for a delivery crisis accelerates.

A PROBLEM TOO BIG TO SEE

 

We have a problem.  And it is so big nobody can see it.  

We like to talk about American Exceptionalism.  We're better,  we works harder, we innovate better, we out negotiate, out manoever, out hustle our enemies and our freinds in every deal.

But really American exceptionalism is due to our performance in World War II.  We came through that war with the world's victorious military, and with the only intact economy because the war was not fought on our soil. So we ended up with the world's RESERVE CURRENCY.

When you have the world's reserve currency you have the privilege of printing money to buy your own debt.  And, at first, everyone buys your debt because it is the safest and most stable investment, and it is needed to settle large international commidity trades like oil.  And so that is the instrument of exceptionlism - as long as you prudently manage your economy..  And as long is you prudently resist the urge to WEAPONIZE your currency.

That is American Exceptionalism.  Before that it was British Exceptionalism.  Before that it was Dutch Exceptionalism.  All the way back to Roman Exceptionalism and Athenian Exceptionalism.  

And America did manage its economy prudently and resisted the urge to weaponize its currency - Until Nixon took America off the gold standard in 1971.  What ensued was a steady increase of debt that culminated in a massive inflation,  But Volker and Carter raised rates to over %20 and broke inflation.

Then the 1980's came and we began to amass debt in unprecedented quantities.  And when anything bad happened all we had to do was lower rates back below the cost of money, bail out the bad actors with printed dollars, and the debt orgy continued.  And we turned from a surplus economy to the world's biggest debtor economy. 

Then Clinton did away with Glass Steagel and we discovered financialization.  And that allowed for debt to become an instrument for gaining tremendous wealth if you were able to borrow deeply below the real cost of money to buy up real assets.  Wealth became increasingly concentrated in fewer and fewer hands of those with access to cheap debt, and inflation became embedded.

This weakened our reserve currency position but only marginally.  But eventually the debt bomb exploded in 2008 and rates went to zero and the we printed trillions and trillions to bail out the bad actors.

Then covid.  And rates stayed at zero and we printed 9 trillion dollars to bail out everyone.  Meanwhile we began to to toy with tarrifs.  Now tarrifs have a place in a Mercantilist economy.  And many of our trading partners were acting in a Mercantilist manner.  So it can be argued tarrifs were a proper response.   However, we are the only party with a reserve currency.  And you have to resist the urge to weaponize the reserve currency or risk other countries trying to de-dollarize in response to the weaponization.

Then Biden committed the ultimate transgression for a reserve currency.  He kicked Russia out of Swift (a system to clear dollar denominated transactions) and he confiscated their Dollar denominated debt instruments.

The dollar was suddenly the ultimate financial weapon.  

This works as long as there is no alternative to the reserve currency.

But what it does is incentivize other powers to aggressively de-dollarize and set up atlternatives for settling and clearing tranactions.  China, Russia, Middles Eastern oil powers, India, Brazil, and many other sattelite countries have begun to aggressively de-dollarize.

And the first step is shoring up your resereves by replacing dollars with GOLD,

That is the drive of the Gold trade, and it is irreversible until a new global equalibrium is established with new clearing and settling currencies that aren't weaponized or laden with debt.

This will take time.  The dollar and Eurodollat debt markets are massive.  But so is the impetus for other powers to get out from  under the weight of a weaponized dollar.

Meanwhile, what nobody seems to see is that the continued weaponization of the dollar through ever more aggressive Tarrifs is forcing all of our trading parners to ever more aggresively de-dollarize.

So nobody is buying our debt now.  While the debt sprials out of control.  

Therefor we have to buy our own debt with printed dollars.  But this causes inflation to spiral out of control.  And it causes the long end of the yeild curve to spiral out of control.

And here we are.  Racing towards an end game where yeild curve contorl and hyperinflation destroys the economy.

And somehow nobody seems to see it coming.

GOLD MAKES AN ALL TIME HIGH - NOBODY IN THE US NOTICES

 

Gold has made an all time high, rocketing nearly 100 dollars since inauguration day.  Yet nobody in the US has the slightest interest.  We know that because inflows into the GLD ETF move between modestly positive to modestly negative month to month.

Interest in China, Russia, South America, Eastern Europe, Much of Western Europe and the Middle East is at an all time high, led by Central Bank purchases in all of those areas.

But here in the US interest is high in Bitcoin, AI, Trump Meme Coin, Dawgz AI, and Black Box Private Equity Bundles.

This is not a joke.  Nor is it an exaggeration.  Pension Funds across the US are loaded up with "investments" that have no track record, little to no liquidity, and in many cases, no mark to market information.  And not just pension funds, many US investors have borrowed to the hilt to get in on these "opportunities."

Meanwhile, globally the interest in old fashioned boring Gold, Real Estate, Old Master Artworks, Diamonds, and other deathly boring investments are soaring.  The Swiss Federal Pension fund has Gold now as it second highest percentage investment.  The Florida Pension Fund has Bitcoin (bought at an all time high) and Private Equity Black Box investments as its top two "investments."  And when I say Black Box - that means not only are the returns opaque, they don't even know what investments are in the bundles.  The PE firms say that if they told, they would lose their edge.  Seriously.

What is the reason for this extraordinary disconnect?

One thing that might account for the difference in investing strategies is that the Swiss Pension fund has Investmtent Executives with an average of 30 years of proffesional investing experience on its board.  The Florida Pension fund is managed by political appointees none of whom have any proffesional investing experience.  None, not a single one.  They are all lifetime political hacks.  That is not a joke.  Certainly not for the the citizens of Florida. 

According to Warren Buffet the entire US pension fund system is broke on a mark to market basis.  But that's just Warren Buffet; he's really old, so he probably just doesn't get it.

So far AI has little to no monitizable value for the companies that have loaded up on purchases.  This is because AI makes mistakes that are impossible to check without countless editing man hours.  So any company that can be sued for an AI error can't use AI.  That's most of corporate America.

I'm sure some day they'll overcome this drawback.  But right now they're not close.

And as for Black Box investing - Well the financial crisis of 2008 was caused by excactly that type of black box bundling.  It's happening again less than 20 years later.  Repeating the same mistake and expecting a different outcome is the definition of Insanity.

So it is American Exceptionalism or American Insanity?

I don't know.  But Gold is betting that it's the latter.

And I'm betting on Gold.

And eventually some Americans will catch on.  Then the price will really soar.

LONG RATES BACKING UP WHILE THE FED CUTS: GOLDEN ROCKET FUEL

 

This will happen:

As the funding needs of the US government spiral out of control while the tax income is slashed, only one outcome is possible: The US goverment will be forced to issue massive new debt and the markets will demand ever higher rates at the long end.

Meanwhile the Republican Majority supports the president taking over the responsibility for setting short rate policy (That used to be the Domain of the Fed).  And he has made it very clear he wants rates lower, preferably back to zero.  That will be a tremendous benefit to his real estate holdings.  It will be a disaster for inflation.

Period.  End of Story.  This answers the question Cui Bono?  Who  benefits?  The person setting rate policy benefits.  The Billionaire class holding reals estate, gold, art, pop culture memorabilia, and other hard assets, and also some crypto (not a hard asset but an asset favored at the moment by Billionaires in charge of the government.)

Who doesn't benefit?  Anyone who lives and works dependent on job income to feed and house and nurture their families.  Without hard assets their income buys less and less.

And the Fed loses all credibility which will be a disaster for the dollar even further damaging purchasing power for wage earners.

Of course the government will come out with statistics showing Inflation has come back down.  But all that means is that the rate that things are inflating has slowed.

Nothing will ever be cheaper than it is today.  Except Fad Impulse assets.

Insurance, education, housing, food, energy, medical costs  will always inflate under a regime that refuses to raise rates above the real rate of inflation which is close to 10 percent

The last regime with the courage to do so was Carter/Volker even though they knew it was political suicide.  They took rates to 20 percent and caused first a terrible recesion but then a boom that lasted 50 years as each successive regime simply cut rates whenever anything economically challenging occured.  

But Volker raised rates when the US was a creditor nation.  Now we are a massive debtor nation.  So raising rates will be much more painful for everyone who financed purchases at zero and then has to roll over their debts at 7,8,9,10 percent.  All private equity and private lending would go broke.  That's the shadow banking system crashing.  It will not happen.

So inflation must continue to spriral out of control.

And hard assets, especially gold will spiral ever upward.

WOLF RICHTER ON THE DOLLAR"S RESERVE STATUS:

Status of US Dollar as Global Reserve Currency: USD Share Hits 30-Year Low as Central Banks Pile on Other Currencies & Gold

by Wolf Richter • Jan 5, 2025 • 

If the rate of decline over the past 10 years continues, the dollar’s share will sink below 50% by 2034.

By Wolf Richter for WOLF STREET.

The US dollar lost further ground as global reserve currency among many reserve currencies held by central banks. Its share has been zigzagging lower for many years as central banks have been diversifying their holdings to assets denominated in currencies other than the dollar. And they’ve also been diversifying into gold. But the dollar remains by far the dominant global reserve currency.

The share of USD-denominated foreign exchange reserves fell to 57.4% of total exchange reserves the lowest since 1994, according to the IMF’s COFER data for Q3 2024. USD-denominated foreign exchange reserves include US Treasury securities, US agency securities, US MBS, US corporate bonds, US stocks, and other USD-denominated assets held by central banks other than the Fed.

In Q1 2015, the USD’s share was still 66%. Over these 10 years, the dollar’s share of global reserve currencies has dropped by 8.6 percentage points. If this pace of decline continues, the dollar’s share will fall below 50% in less than 10 years, by the end of 2034.

 

The new Populism and Gold

 

The populist revolution is spreading all over the world.  Orban in Yugoslavia.  Republicans in the US.  Le Pens in France,  Farage in Britain, the Neo-Nazi AFD in Germany, Chavez in Venezuela, and similar parties all over the world.

I don't care to speculate on why they are all taking power, or why the particular leaders appeal to their working class partisans.  I just think it fascinating that all the populists leaders are very wealthy and are all backed by Billionaire co-leaders, proxy leaders, and the entire billionaire class of their particular countries.

The Republicans are backed by Elon Musk and most of the rest of the Billionaire class in the US. Orban is backed by multibillionaire Lorinc Meszaros and his son in law is the youngest Billionaire ever in Yugoslavia.  The Le Pens are backed and controlled by Billionaire Vincent Bollore, and Nigel Farage seems to be a puppet of the Murdoch family.  The Flick family are the most prominent German Billionaire neo nazis, but certainly not the only ones

Why the Billlionaire class is attracted to an extreme right wing nationlist agenda that also appeals to the working classes is for historians and psychoanalysts.  Or perhaps they just don't care about the agenda as long as they can buy the leaders.

All I can say is if you want to understand what the ultimate policies of these  politicians will be and their economic results you have to ask one question: CUI BONO?  Who Benefits?

Now it may be the working class that elects these people.  But it is the Billionaire class that pays their parties, their election costs and their salaries.  So the Billionaire class will be the ones who benefit.

And the Billionaire class is dependent on the ever increasing flow of liquidity coming from the world's central banks.  This flow is highly inflationary.

So expect inflation.  And expect gold to rise with the tide of inflation,

GOLD AND THE ECONOMY: CUI BONO?

 

Where is the economy headed under this new administration?  What does it mean for gold?

To answer these questions there is a principle of Logic attributed to Cassius and often used by Cicero - that was taught to me in 10th grade logic (do they teach logic any more?) and that principle is to ask CUI BONO?  

Who Benefits?

This question is the first principle for uncovering the logic behind any situation.

Take the cease fire between Israel and Hamas.  CUI BONO?  Who benefits?  Well, at first, everyone benefits.  Israel gets back hostages, and gets temporary respite from criticism in the international press.  Hamas gets a pause in the bombing so they can try to regroupe and reassamble their command structure.

Beyond this neither Netanyahu nor the Hamas command structure benefits from a pause in hostilities because they are both commited to wiping out their opponents.  So of course the cease fire can not hold.

If you want to move beyond CUI BONO you can make all sorts of arguments to the contrary, but why bother?  CUI BONO gives the answer you need to anticipate the ultimate result.

Now take the US economy.  The main issues are Debt, Inflation, Cost of living, and the Asset Markets.

Of course the economy is tremendously complex.  You can - and must - analyze global liquidity and the flow of funds.  And the Global Debt Structure and the Global Energy use and distribution.  And many other things.

 But first: CUI BONO?

Who benefits?

To understand who benefits you must look at who is in charge

Right now the Billionaire class owns the US government.  Period.  End of story.  The President, Co-President, Commerce Secretary and Secretary of the Treasuy are all Billionaires.   The Billionaire class also owns the Russian govenment, and the Chinese government (Though perhaps to a lesser degree in China.)

The Billionaire class is benefited by the exact same thing all over the world: Increased liquidity to float the Asset Markets ever higher.

Increased liquidity means printing money.  And amassing more debt.

This drives up inflation.  But inflation doesn't matter to the Billionaire class.  They love it.

But won't the masses get angry as the costs of everything rises?

Yes, but the Billionaire class also owns the media.  They own Tik Tok and X and all the internet media and most of what you see on television.  So they can control the messaging and blame the inflation that they must and will engender on everything and anything but themselvbes.  Wokeness.  DEI.  Transgender swimming teams.  Immigrants. Jews.  Who cares?  As long as they don't get blamed they can get away with it forever.

They've gotten away with it - and everything else - for years.  They've been the shadow banking system through Private Equity and Private Lending - that controls everything for the past decade, driving up prices and buying up all the assets, and nobody blames them (except Gretchen Morgensen) for anything.

So you can argue this or that til you get blue in the face.  But if you ask CUI BONO?  You get the best and only answer you need.

Inflation will soar.  And gold will soar with it.

GOLD, INSTABILITY AND THE FED

 

The most destabilizing economic force is inflation.  As inflation carreens out of control the only monitary beneficiary is gold.

The last US president to seriously fight inflation was Carter with his Fed Head Volker.  They broke the back of inflation with 20 percent rates, brought on and suffered a terrible recession though they knew it would be politically disasterous, and enabled 50 years of unchecked negative real rates that sparked a 50 year market bubble that is just now blowing off.

Taking rates from %20 to %0 with a backdrop of globalization to suck up inflationary results was a once in a century run - or perhaps a unique historical run.

That's over.

Globalization has given way to a new age of Super Power Imperialism.

And 50 years of negative real rates has brought about an economy that moved from a creditor economy to one of the world's largest debtor economies.

Now inflation is permanently out of control - remember the Inflation rate is only a measure of how much more inflation is increasing.  Even at 2 percent (which may never again be reached) prices are still careening out of control - just at a slower - 2 percent - rate.

The US government is living with 2-3 trillion dollar yearly deficits with long rates permanently backing up - in spite of a Fed that is officially easing. 

So what is the FED to do?

The conventional wisdom is that they can't keep cutting in this circumstance (sticky inflation, rising rates and near full employment).  The market is acting now as though this is obvious.

HOWEVER - the FED - (like the SUPREME COURT - and like CONGRESS) - though supposedly independent and co-equal to the President - is actually a wholly ownded subsidiary of the US Billionaire class that controls the US presidency.

The only question is this: CUI BONO?

In other words: WHAT WILL BENEFIT THE BILLIONAIRE CLASS?

the answer is this: LOWER RATES no matter what is happening in the broad economy.  Because the narrow economy - the Hard Asset owning class - the Blllionaire class - makes money as liquidity rises.  And liquidity only rises as the real cost of money remains substantially lower than the rate of inflation.

So the Fed will be forced to cut.  And if they resisit, the members will be replaced - whether the law allows for this or not.  Because the LAW is also a wholly owned subsidiary of the Billionaire class.  

If you don't beleive it just look at the felons and rapists and tax cheats and violent insurectionistts that fill the top posts in the government.  If they are in the Billionaire class or endorsed by the Billionaire class nothing else matters.

Learn it.  Love it.  Live it,  Invest accordingly.

GOLD and INSTABILITY: CERTAINTIES VS PROBABILITIES

 

If we take the axion that gold is an instability hedge as true, then what do we know for sure about global instability and what can we expect as probability?

Things we know for sure:

1) The world has changed from a Unipolar (The United States) center of global power to a Multilateral (China/Russia/Iran axis vs the US)  center of global power.  This change will necessarily create instability until a global understanding of this new order has been established.

2) The world debt situation has crossed every line that seasoned wealth managers consider to be red flags of instability: Debt to GDP, Debt Service to GDP, Debt derivatives to the Global underlying assets.  And all of these things are accerlerating towards unprecedented levels of instability.

3) Financialization and Permanent Negative Real Rates have created a massive imbalance between rich and poor - and Super Wealthy and Middle Class - and this trend is also accelerating at a pace wherein all the assets are being concentrated in fewer and fewer hands while the cost of living rises at alarmng rates.  This creates massive instability within countries. 

4) Government in the US has become concentrated in the hands of the Super Wealthy.  So the world's largest economy is now a wholy owned subsidiary of the Billionaire Class.  This is a majorly unstable situation as the goals and aims of the Billionaire class is at diametrical odds to the goals and aims of the rest of the country.

Things that we can surmise:

1) Tarrifs.  Tarrifs lead to instability.  Tarrifs and counter Tarrifs destroy supply lines, create global tension, and lead to trade wars that can and do often lead to hot wars.

2_ Anti Immigrant sentiment in almost the entire First World is also historically tremendously destabilizing for the countries the foster this sentiment.  It led to the Second World War in the 1930's which was the last period wherein this sentiment was most similar to our present era.

3) Over valued equity markets lead to mean reversions that tend to wipe out capital for those who can least afford it.  That is to say small speculators who follow trends without understanding how to hedge postitions and how to understand valuations in terms of historical means.  

It is especially true when wages stagnate in relation to the cost of living so that desperate citizens are driven to gamble what little capital they can accrue.

We are currently at extremes of specualtion and valuation that exceed the markets bubble of 1929 that led to the great depression.  Many believe This Time is Different because of AI.  But this time has never ever been different.

When this bubble bursts the rift between the super wealthy and the middle class will expode as many middle class families will become part of the working poor.  Nothing could be more destabilizing

4) Loss of faith in Institutions.  This is not only on the rise but is being amplified by the ruling class.  This only happens in periods of Autocracy wherein the Tiny Ruling Faction want to destroy the validity of any competing governing bodies.  This is tremendously economically destabilizing because investment occurs in direct proportion to faith investment parties have in the Oversight and Enforcement Intstitutions that make Contract Law viable.  Without an iron clad faith that a contract will be honored, economic activity eventually grinds to a halt.

This is true Internationally when treaties and even trade norms are violated, and this is true within nations when faith in Government institutions is damaged.

It would appear that this is on the rise in all areas.  It can not be measured accurately.  But over time the effects become obvious.

All of this - in so far as you agree with it - is reason to own gold.  And reason to inrease your gold position.

To the extent that you disagree with all of the above then stay away from gold and speculate in whatever else you like.