We have had a nice ride off the bottom in gold and silver which I suggested was close in September and alluded to in my August article. This was my first article since April of 2020 where I simply gave my book away for free as I felt that is all one needs to understand the buying and selling of gold and silver, as well as what happens next for the precious metals.
Fast forward to today, and gold is already at record highs this morning before the banks, who are now short gold, smacked it down $100 off its highs. What does this mean for gold investors when we get a pullback such as we got today? It means you need to step in and buy more as it falls as this is your last opportunity to buy low.
Gold’s Record High Should Set Off Alarms for Your Portfolio
If you look at the cycles of gold, about once every 10 years (give or take) it has a run and we hit new highs. In the period of 1980 – 2000 gold didn’t hit a new high but rather was forgotten about. Government spending kicked in and all that excess monetary stimulus went to creating the best 20 years for the market and guess what? It hasn’t stopped.
At least until now. But all that spending is catching up to the economy. While those who have been in stocks have enjoyed the results of the stimulus, as new technology and social companies rose to new highs, the consumer has reached its limit in spending as well. When the roaring 20s were here, everything was great, and then the great crash. We have had roaring decades and saw the national debt go from Reagan’s 1982 increase in spending where we first broke $1 Trillion in debt, to the present $33.9 Trillion.
That’s $260,000 per taxpayer that is owed. But overall, the median net worth of U.S. households is only $192,900 according to the Fed’s Survey of Consumer Finances (2022). While the median net worth is just over $1 million, it includes all the nations billionaires and multimillionaires that skew the data. If Elon Musk is presently worth $250 billion, that’s 1.3 million households' median net worth that 1 person represents. Add in the top 20 billionaires in the U.S. and you get 1.774 Trillion of net worth. This represents 9.2 million households in America.
The point I am making in the above analysis is your average household is not capable of helping pay off the $33 Trillion of debt and billionaires aren’t being told to fork over more (today), so the only way to make the debt seem like it’s a non-issue is to inflate it away.
Inflate the Debt Away or Raise Taxes – The Only Choices Outside of Default
Richard Russell is the person who first got me interested in gold in 2002. I was a financial advisor then but didn’t know much about gold. We were never taught anything about gold but I went ahead with my career and by 2006 decided to pursue my CFP (Certified Financial Planner) designation as that is what the industry wanted us to do.
I bought all the books and began reading them as I would have to take tests for each subject. I started with the investment book as that is where I wanted to be in the future. While reading, I read what they wrote about gold in the commodities chapter and it simply made no sense. I decided I wanted to become an expert in gold at that time as I had learned so much about gold but needed to learn more.
I took 3 years off and researched and by 2010 published my first book Buy Gold and Silver Safely which I updated in 2018. The one thing I learned from all of my research is opposite of what everyone else was being told. That thing was that the dollar can’t crash. If the dollar is a representation of the Euro, Yen, Pound, Canadian dollar and a few others, then by definition, if the dollar crashed, these currencies would have to skyrocket. The problem with that scenario is, all of these countries have tremendous amounts of debt also. Richard Russell famously said one thing that sticks with me to this day, and it’s true for all the currencies mentioned above. He said that we have to “inflate or die.”
What does inflate or die mean? Well, Richard Russell died in 2015 and had been saying inflate or die from at least 2002, and we haven’t died yet. So inflate is all we have done since the times of Reagan and even before. Reagan stepped up the game in 1982 and every President since has said they would do something about the debt and all that has occurred is we have added more debt each time to record levels. And during all this time, Congress has come up against debt ceilings and every single time they raise the ceiling. Do you see how this game of inflation is played? So how do we die? And is gold sniffing out this death march?
Before getting into what happens next, we need to address one more part of this inflation that is hidden from most analyses. The Federal Reserve, the ones in charge of our monetary system, has also increased their balance sheet adding on presently $7.1 trillion of additional debt through various quantitative easing programs, making them not the “lender of last resort,” but the buyer of last resort.
So they magically have been able to make this inflation game and “trust” in the U.S. dollar last longer than most dollar death advocates have imagined. The Fed this year has been paying off some of the debt but I have followed it every week and they don’t seem to be making a dent into it. Remember, all of this is occurring in an overall decent economy and healthy stock market.
Add To Your Gold and Silver Holdings – Last Opportunity
This will be your last chance to add to your gold and silver holdings at these low prices and premiums. As the price of gold and silver rise, the price and premium rise together. This means it will cost you more to purchase metals. By buying now, you lock in the lower price AND premium.
You sit back for a few years and come back and see if I think you should sell some. You won’t regret the price you buy at today and believe me, when the next few banks fail and people lose faith in the Fed, you’ll see many have to buy higher just to protect what they have.
Gold and silver are insurance against the spending of the Fed and our government. It’s clear as day that there is eventually an end game. If you are gold and silver you’ll be ready for it. There is a reason we just hit a record high in gold and silver has some catching up to do and should lead gold over the next year.