Why Gold? Why Now? | The Gold Standard 2236

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Volatility is the word that defines 2022. Market volatility is a product of the uncertainty permeating throughout Wall Street. How slow will the US economy get? We warned that now is the time to diversify whatever portfolio you have. Put some of your wealth in precious metals.

In this episode of The Gold Standard, we explore the question, “Why Gold? Why Now?”

If you define a recession as two consecutive quarters of negative gross domestic product (GDP), our country has been in a recession since summer. The strong labor market and corporate earnings reassure people that we’re not in a recession, at least not yet. Others argue that we’re not in a recession yet, but they admit one is on its way.

Most people feel their dollars don’t go as far as they used to. Prices are rising across the economy. Movie tickets used to cost about $2.89 on average in 1980. The average cinema ticket price jumped to $9.16 by 2019. If you save a $10 bill from 1980, it will buy two fewer movie tickets in 2019.

Holding on to tremendous amounts of paper currency is not a good idea because inflation erodes each dollar’s value.

The Fed’s reckless printing of money drives inflation and continues to feed an unhealthy addiction to debt. The “easy money” policy will continue to lead us to a cascading waterfall of problems. In 2007 the Federal Reserve’s balance sheet was less than $1 trillion. Today, the balance sheet is exploding off the page at nearly $9 trillion.

The Fed created money to keep interest rates low as long as they did by purchasing treasury bonds and mortgage-backed securities. This reckless money printing, combined with record government stimulus and supply chain disruptions, has added to the pressure of a perfect storm. Fasten your seatbelts. We are in for a bumpy ride in 2023.

Many factors have contributed to the massive Everything Bubble. The central banks are contributing to the largest bubble we’ve ever seen. Still, the Fed pumps it up even more, each time they go into one of their money printing frenzies.

One of the nasty byproducts of bubbles is the tremendous distortions in the market they create. Capital is misallocated for years until a crash ultimately happens. The mother of all bubbles, the Everything Bubble, will cause the most significant financial calamity of the 21st Century. The truly immoral part is its negative impact on later generations. The younger generation will struggle to pay off a massive debt they didn’t create.

The value of gold has demonstrated resilience in highly adverse environments. Many investors are frustrated that gold hasn’t performed better than it has. Although gold went down a few times between 2013 and 2016, it bounced back every time.

People should change how they think about gold and remember that the precious metal has maintained its resilience through monetary collapses and will continue to do so. As an insurance policy, gold is a store of value and not an asset to drive returns. The worse things get, the better gold will perform.

Investors must understand that gold is a store of value and not an investment like a stock. Look at inflation as an example. When inflation increases, the purchasing power of the money you have decreased. With a 10% inflation rate, something that costs $1.00 will now cost you $1.10. You would need more currency to buy the same goods. Since gold holds its value, you can offset the loss of purchasing power of your dollars by investing in gold.

Gold prices usually increase when the economy weakens as investors flock to the mainstay of all safe-haven assets.

Gold is a universal indicator of economic health. Gold is a foundational asset for countries and central banks. Even though no country is on the gold standard today, many countries still hold large reserves of gold in case of economic collapse. Despite financial circumstances, gold works as a source of trust because it has no credit or counter-party concerns. Banks use it to hedge against loans made to their government.

The Saint-Gaudens Double Eagle is a classic coin and is considered the premier numismatic gold coin of US coinage. They were minted and released for circulation between 1907 and 1933 when President Roosevelt ordered the confiscation of gold. The Saint-Gaudens Double Eagles seen on the market today are the survivors from that era. Saint-Gaudens Double Eagles are rare.

The Double Eagle is a coin with a face value of $20. The first double eagles were Gold Liberty coins circulated in 1850. President Teddy Roosevelt commissioned Augustus Saint-Gaudens, the most famous sculptor of the era, to create new designs for American coinage.

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