Gold climbing from record high to record high: why buy now?

by
Claudio Grass
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Part II of II

Business as usual” will simply not cut it anymore. The “print and spend” policies of the past, the QE lifelines, the liquidity injections, the zero and negative interest rates, the blatant debasement of the currency, the market manipulation and all the direct and indirect bailouts will not work as they did before. 

And it’s not only because the central bankers have overused these “weapons” and have by now exhausted all their options – this is a widely recognized problem that has been pointed out by hordes of economists and countless sensible investors for years already and still remained unaddressed. It is plain as day to any thinking person by now that creating money out of thin air in order to prop up a failing economy and to try to postpone the long-overdue bust is not a sustainable approach. It is equally apparent that the side effects of this “cure” are worse than the disease itself. 

The covid crisis made it clear, even to those who failed or refused to see it: the unprecedented government spending spree, the “covid cheques”, the wholesale business loans and the previously inconceivable amounts that governments wasted (totally unchecked) throughout the pandemic, caused much more and much bigger problems than they solved. 

Indubitably, there were some people who benefited from these policies, but their number surely pales in comparison to the vast majority of the population who was severely harmed by them; in many cases, irrevocably so. The readily predictable inflationary wave that inevitably followed all this fiscal and monetary largesse drove innumerable households in dire financial straits and decimated whatever had remained of the middle class.

Apart from the above-mentioned practical, economic reasons that guarantee that these timeworn “print and spend” measures are doomed to fail this time around, there are additional political and social factors that also support this case. For one thing, the average western citizen is simply fed up with all the grand promises and the hollow rhetoric and all the clichés and all the great ideas and magic solutions that politicians dangle in front of them. The average citizen is also equally sick and tired of being gaslighted, of being told that the economy is doing great, that inflation is a thing of the past and that they are fortunate enough to be living at a time of roaring growth, opportunity and prosperity. Hardworking people who have been watching their paychecks shrink and have been struggling to make ends meet for over two years are being asked to reject the evidence of their own eyes. They are being told to ignore the cold hard facts of their daily life, to disregard their direct lived experience and to discount the hardships they have to endure. They are being asked to suffer in silence, to pretend that their own version of their own reality is hopelessly distorted and unreliable and to accept the State’s narrative as gospel, even if it directly contradicts what they see right in front of them. 

In this context, it is near impossible to imagine how a system so corrupt, so despised, so inhumane and so misanthropic can continue to function, even on a very basic level, for much longer. Its fuel, namely the irreparably debased, inherently worthless and criminally fraudulent fiat currencies, is increasingly being questioned. More and more people are recognizing the fatal flaws and the deception that lies at the heart of paper money, especially since technology brought us far superior, decentralized, secure and efficient alternative means to transact with each other. On an even more fundamental level, the most basic function of money is also being challenged: it is becoming increasingly obvious that state currencies cannot be relied upon to serve as a store of value. As doubts and concerns keep growing and spreading, and as the search for alternatives intensifies, the State’s grip on the monopoly on money weakens. Without the power to manipulate and control money, the current system is inescapably doomed to collapse under its own unsustainable weight.

This is the true nature of that great shift that I mentioned before. This is what the gold price surge is trying to tell us. As regular readers surely know, I frequently highlight how important it is for any successful investor to be able to tell the difference between “the signal and the noise”. 

Gold’s ongoing bull market and the record highs that came with it are not meant to be dissected and misinterpreted and misused by speculators looking to ride a trend and make a quick buck. This is merely the noise. The signal is revealing a much bigger picture: there is a tectonic shift underway. It can, and most likely will, reshape, redefine, reinvent and reconstruct the world as we know it. Faith-based, intrinsically worthless “assets” like fiat money have no hope of surviving this transition. Discerning investors are clearly realizing this and that’s why they are flocking to the oldest and most dependable of safe havens. 

So no, it is not “too late” to buy gold, far from it. The great shift is still in its infancy and this latest gold rush we’re seeing is only the beginning. It is not too expensive either. Even at all these record highs, the price you will pay for the protection that gold provides is much lower than what its absence will cost you down the line. 

Claudio Grass, Hünenberg See, Switzerland. www.claudiograss.ch

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