Guest Post by Martin Armstrong
Investors’ curiosity has peaked as central banks are increasing their gold purchases. We are not going back to a Bretton Woods type situation and that is not the issue. You must understand that gold is neutral. Central banks are buying gold because the Neocons have weaponized the dollar.
Russia was removed from the SWIFT system, and private citizens’ assets were confiscated. When Russian assets were removed from SWIFT, a threat to the world was issued to say, “Hey, if you don’t do what we tell you to do, we will take you out of SWIFT.”
This is not the end of the dollar. Money continues to pour into US equities, particularly the Dow. Why? When the drum of war is beating, major institutions rush to move their money into a safe haven, which happens to be the US at this point in time. The big money is not purchasing start-up equities on the Nasdaq, for example, as they will not take that risk. Our computer model indicates the Dow will continue rising into 2032 as it remains one of the last safe havens.
The West has become extremely aggressive in its geopolitics. You simply do not buy the debt of your enemy. Central banks are buying gold because the USD is political.
There is a stark difference between short-term and long-term bonds. The central banks have zero control over the short-term and that is how this whole QE fiasco began as central banks began purchasing long-term debt in an attempt to reduce long-term interest. Why would you buy long-term when war, the primary driver of inflation, is looming? This is a serious situation that the neocons who have weaponized the dollar simply do not understand.
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Why are central banks buying gold? Because gold (and silver) are money and nothing else.
371.25 grains of pure Silver is the definition of the US dollar from the Currency Act of 1792. One pound of pure Gold equals 15 pounds of pure Silver. 15:1 ratio. A pound of Gold today is over $30,000. Fifteen pounds of Silver is about $5,700. Silver should in theory be $150+.
There is a broader concept. The dollar has been backed by gold for a very long time. It was 100% backed from 1791, then 40% backed post 1913 FED creation. It is still somewhat backed by gold with the 7000 tons of gold in Ft Knox. However…..
If 40% backed it would be valued at perhaps $5,000 – $20,000 per oz. If 100% backed? Guesses are $50k+. This stark comparison more clearly shows how severely the dollar has been debased over the decades and the last century. Soon enough it will become nearly worthless. Gold isn’t increasing. Dollars are decreasing.
So…..quit saving in dollar denominated assets. Save in precious metals, physical, outside of the banking system.
The Chinese culture and Indian culture have long depended on gold to protect wealth having experienced multiple collapses by corrupt regimes over centuries.
That’s correct. I’ve been telling folks for years it’s all about the ounces and not how many fiat units are assigned to its value.
I know the claim is 7-8,000 tonnes in Ft. Knox. My late father-in-law helped guard a Gold shipment while being loaded up there 70 years ago as a Captain in the Army. I don’t believe there has been any audit IIRC. SUPPOSEDLY the Clinton administration played games with the Gold and may have “stolen” it in some crooked deal around the same time as the so-called “Brown’s Bottom” when an idiot Brit official sold England’s Gold in the high $200’s. I remember buying three coins back then for $287 each.
Yes. A lot has been stolen. Chiang Kishek gave the USA big piles of Chinese gold when he went from China to Taiwan. We demanded it as protection. His wife asked for it back, and of course we did not give it back.
What 7,000 tons in Ft. Knox?
I always believed for years that putting a “1” in front of the price would be more accurate as to how much it should be…
And the record $50/ounce that was reached in 1980 – is roughly equivalent to $600-650 in today’s dollars, so in my mind, it has a looong way to go before reaching an all-time high.
Been hearing people make that gripe for 50 years now. I believe it’s NEVER gonna happen. At least not as long as one single manipulator remains alive.
One of the things GOD Hates is an unjust scale.
Not only is gold money, it’s insurance against fiats fatal flaw…it’s just paper.
They’re buying gold because they can’t just take it from us,,,, yet.