In this week’s Money Metals Midweek Memo, host Mike Maharrey dives deep into the broader economic landscape as the US saw another pivotal election.
Despite the usual hype of each election cycle being “the most important,” Maharrey offers a different perspective, suggesting that regardless of the outcome, Americans are likely to see the same trends continue—big government, increasing debt, and ongoing monetary policy impacts.
Maharrey shares insights on why sound money, particularly gold and silver, may be the best choice for safeguarding wealth.
The Growing Federal Government: A Persistent Trend
Reflecting on past administrations, Maharrey highlights how each president, regardless of party, has increased federal government size, debt, and spending.
“Every administration grows the government,” he says, pointing out that both Republican and Democratic leaders have enacted policies that expand governmental reach. Historical data on spending shows that these trends remain consistent from the Reagan years through Biden, with few, if any, exceptions.
Even Trump, who campaigned on deregulation and smaller government, made significant moves that expanded federal control, particularly in areas like gun regulation. Maharrey warns that any hope placed in presidents to solve the nation’s deepest issues—like the debt, spending, and overall size of government—is likely misplaced.
America’s Founders Warned of This
Quoting Founding Fathers like George Mason and Thomas Jefferson, Maharrey argues that they foresaw the dangers of centralized power. The country, he explains, has shifted from its constitutional foundation, where state governments were meant to hold significant power.
The erosion of decentralized government has led to overreach, excessive taxation, and infringements on personal liberties. Jefferson’s warnings about centralizing control in Washington, D.C., were prophetic; Maharrey calls the current federal government one of the largest in history.
Sound Money: Gold and Silver Lead the Market
The real winners of 2024, according to Maharrey, are gold and silver. Statistics underscore their strong performance:
- Silver has increased 42.4% in 2024, while gold is up 33.7% by the end of October.
- Both metals have outperformed major stock indices like the NASDAQ, which posted a 24% gain, and even outpaced the broader commodity markets.
Gold's price rally is notable, setting 39 all-time highs in 2024. This performance reflects investors’ growing confidence in gold and silver as safe-haven assets amid rising geopolitical tensions and economic uncertainty.
High Demand for Gold Continues
Investment demand for gold surged in the third quarter, driven by geopolitical concerns and economic conditions. Maharrey reports that total gold demand reached 1,313 tons in Q3, with the total value exceeding $100 billion for the first time.
ETF demand also surged, marking a 95-ton increase in global gold-backed funds, a trend driven by Western investors finally joining the gold rally.
Despite high gold prices, central bank buying remains strong, with Poland adding 42 tons to its reserves, making it the top central bank buyer for the quarter. The ongoing accumulation by central banks, even at elevated prices, signals confidence in gold’s role as a long-term asset.
Silver’s Strong Position and Growing Industrial Demand
While gold captures much of the attention, silver is performing remarkably well, especially in industrial applications. It remains well below its all-time high near $50, but it has historically lagged in early bull markets only to make sharp gains. With the gold-to-silver ratio currently above 80:1, silver appears undervalued, suggesting it has room to grow as the market matures.
Silver is seeing an uptick in demand due to green energy initiatives, with industrial demand forecasted to maintain a supply deficit. The cup-and-handle technical pattern on silver’s 50-year chart also suggests a bullish trend, signaling potential for significant price movement in the coming years.
The Case for Decentralized Power and Local Action (WA:ACT)
A longstanding advocate of decentralized governance, Maharrey emphasizes that focusing on state and local governments is essential for reining in federal overreach. At the Tenth Amendment Center, where Maharrey serves as national communications director, the organization advocates using state and local powers to counter federal policies.
Citing the anti-commandeering doctrine and Madison’s Federalist No. 46, he explains how states can refuse to cooperate with federal policies they oppose.
Final Thoughts: Sound Money is the Real “Decision 2024”
Ultimately, Maharrey believes the best decision this election season is to invest in sound money. With rising national debt, aggressive federal spending, and ongoing monetary expansion, gold and silver offer stability against future economic challenges. He recommends exploring precious metals as a hedge.