What’s Up Ahead? | The Gold Standard 2401

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In this first episode of The Gold Standard in 2024, host Jennifer Horn and Ken Russo, SVP of the Midas Gold Group, provide valuable insights into the economic landscape and what to expect in the year ahead. Together, they explore the key factors shaping our financial world, the challenges and opportunities that lie ahead, and strategies to navigate this dynamic year.

The Path to Today’s Economic Landscape

The journey to the current state of the US economy has been gradual and complex. It traces back to several critical factors, including a historical shift away from the gold standard in the early 20th century, the expansion of government spending and deficits, and the evolution of the global financial system. The US gradually moved away from the discipline of the gold standard, enabling the government to print money without direct constraints. Over time, the country saw a proliferation of debt-driven policies, which, while providing short-term relief, contributed to the accumulation of massive national debt.

Signs on the Economic Horizon

While some are optimistic at the close of 2023, many fear a recession, or something worse, is just around the corner. The growth of commercial loans has slowed to a crawl. While the annualized growth rate of these credit measures was around 11.7% at the start of the year, it has since plummeted to 0.3%, well below the inflation rate. This is a red flag. A healthy economy relies on sustained credit growth. Economic contraction is inevitable as loans and leases fail to keep pace with inflation. Economists predict a recession still looms. Indicators like the inverted yield curve and the Conference Board’s economic index, hint at recession risks. What the Fed does with rates this year will be pivotal in shaping the financial landscape ahead.

The Debt-Based System

The United States operates within a debt-based financial system, where borrowing and debt issuance are fundamental components of its economic framework. This system relies on issuing government bonds and creating fiat currency, not backed by physical assets like gold or silver, to fuel economic growth and stability. The US Government consistently borrows to finance various programs, projects, and obligations, resulting in a national debt that has grown substantially over the years. This approach ensures rising debt levels. Other countries have adopted similar debt-based systems, relying on debt and fiat currency to stimulate their economies. This global trend reflects the interconnectedness of the modern financial system, where nations leverage debt to fund government operations, foster economic growth, and manage monetary policy.

A Store of Value

Gold is a precious metal that has historically maintained its intrinsic worth as a trusted hedge against inflation, economic instability, and currency devaluation. Its enduring appeal is rooted in its scarcity, durability, and universal acceptance. With a track record spanning a millennium, gold safeguards assets and helps to protect investment portfolios through diversification.

Inflation

Inflation is a phenomenon that erodes purchasing power over time, causing the value of money to decline relative to the rising costs of goods and services. The exact amount of money can buy fewer goods and services than it could in the past. It effectively reduces the actual value of savings and fixed-income assets, impacting individuals and investors alike.

Bullion Product: The One-Ounce Gold Eagle

In this episode, Ken Russo highlights the one-ounce Gold Eagle, a prominent bullion product in the precious metals market. The Gold Eagle program originates from the Mint’s response to the 1986 Gold Bullion Coin Act passed by Congress in 1985. Investors and collectors regard the Gold Eagle coins for their iconic design, featuring Lady Liberty on the obverse side and a majestic eagle on the reverse. With their patriotic imagery and guaranteed gold content, Gold Eagles have become a trusted choice for both seasoned investors and collectors, embodying the enduring appeal of gold as a store of value and a symbol of American heritage.

Navigating a Complex Landscape

It becomes increasingly evident that gold is a steadfast guardian of wealth and a symbol of stability in the face of uncertainty. The current state of economic affairs, marked by high debt levels, inflation concerns, and tension in the financial markets, underscores the enduring relevance of gold and silver as reliable stores of value.
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