Economic Chaos and the Stability of Gold | The Gold Standard 2238

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This episode could be the most crucial discussion so far. The state of global economies is in chaos. Dave begins this episode by providing context for a serious problem the world faces with the collapse of economic systems globally, particularly in Europe and Asia. The consequences could damage the world economically and politically.

Ken explains how the global economic system is interconnected. Nations all over the world have amassed unprecedented amounts of debt. None of these governments will ever pay off their debt obligations. Inflation will continue to squeeze each of these countries. Many of which have the majority of the population struggling to meet necessities like food and shelter.

Debt accumulation began long before the pandemic. The European Central Bank’s reliance on bonds is at historical highs. European firms have relied on bond financing. The outstanding volume of bonds relative to bank borrowing has risen to 30%. Britain’s Prime Minister Liz Truss announces resignation from her disastrous six weeks in office.

On the heels of former Prime Minister Shinzo Abe’s assassination, Japan’s national debt, which is more than twice the size of the US debt, continues to grow. As I write this description, the Japanese yen plunges to 32-year lows.

The amount of debt in the US is embarrassingly high because, as Ken Russo reminds us, the US Central Bank’s and politicians’ answer to everything is to print more money. They don’t care about the consequences of hyperinflation. Let future generations deal with it.

Federal Reserve officials continue to use aggressive tactics to strongarm inflation. None of these rate hikes have affected consumers because the printing presses have been working non-stop. No economy has ever printed 6.72 trillion dollars in thirty months. But in a little more time, consumers will feel the effects of the rate hikes, which will be painful.

It is a perplexing time for investors to figure out their next move. What’s an investor to do? The national deficit is at an all-time high. Consumers are flush with cash (because of all the stimulus and money printing). Use what time we have left to prepare. Move some of your paper assets into tangible investments like precious metals.

There’s no better proof of the stability of gold than to look at how civilizations have routinely started to build their financial infrastructure on the Gold Standard. Before gold was turned into coinage, people traded gold nuggets. Gold built confidence, backed paper currencies, and built empires throughout history. Gold is inert to chemical and biological processes and government manipulations in the long run.

When it comes to something tangible that holds its value in the face of uncertainty and upheaval, gold is reliable and will always be there when you need it.

The only way to ensure wealth preservation is to own physical gold. We discuss the importance of not being confused by the various ways to own precious metals. Investing in an ETF or a mutual fund is not owning physical gold. While ETFs or some other form of paper stating you own a certain amount of gold may seem like diversification, it’s not. ETFs, mutual funds, and mining stocks are just more paper displaying that you own shares in a company and are subject to overall market conditions. They are not physical gold and silver.

Investors must have some portion of their nest egg away from the paper markets and the banking system. The essential thing to remember is to own a tangible asset physically.

The Gold Krugerrand is the original gold bullion coin. Krugerrands, named for the former President of the South African Republic, were initially minted in 1967 to promote South African gold while offering a way for the private ownership of gold. The Krugerrand program was immensely successful. Gold mining snowballed in South Africa, and so did the Rand Refinery. Today, the Rand Refinery is the world’s largest single-site precious metals refinery.

The Gold South African Krugerrand has Otto Schultz’s portrait of South Africa’s four-term President Paul Kruger on the obverse. The reverse features Court Stenberg’s famous design of the national animal of South Africa, the Springbok.

Gold Krugerrands were the first government bullion coins to reach the global market and are among the most frequently traded gold bullion coins. Another interesting fact about the Krugerrand is that they’re the first coin not to have a denomination inscribed on either side. Perhaps because of their cheaper costs and high liquidity.

Gold Krugerrands have 22-karat gold at a fineness of .9167%, thus they are not eligible for Gold IRA programs.
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