The Meaning of the Higher Gold Price | The Gold Standard 2421

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Welcome to another episode of The Gold Standard with your host, Jennifer Horn. And her guest Ken Russo, SVP of the Midas Gold Group, as they explain The Meaning of the Higher Gold Prices. Together, they explore the factors driving gold prices and what it means for investors and the economy. But first, let’s go back to April of 1971 when President Nixon severed the US dollar from gold.

In April of 1971, President Nixon, driven by various economic pressures, including the need to curb inflation and stabilize the dollar, took the United States off the gold standard. By ending the dollar’s convertibility to gold, he wanted to prevent a run on the US gold reserves and give free rein to the central bank to print as much money as they’d like. This pivotal moment reshaped the global economic landscape, leading to a fiat currency system where the value of money is not tied to physical commodities. The national debt has been out of control ever since.

Why the Spot Price of Gold Has Been Going Up Lately

Gold is a safe haven asset, included in portfolios to protect against stock and bond losses. Any concerns about the economy or geopolitical instability cause gold prices to go up. Today, the trend is upward for the spot price of gold. The price of this asset, which was $35 in 1972, jumped to $800 in 1980. Many people are comparing the current period to that time, noting the similarities in economic uncertainty.

We saw a price of $1,900 in 2011, and now, gold is up 20% from the last six months. On the date of this recording, the spot price of gold was about $2,420. Ken Russo explains that a higher gold price signifies the corruption and fraud within our country’s central banking system and monetary policy. It also indicates how other countries are losing faith in the US dollar and replacing it with gold. This trend is expected to continue and spread, especially as we move towards a cashless society. Ken shares a chart with Jennifer showing the steady upward movement of gold since 1971. Another chart shows the trajectory of the value of the US dollar, which is declining. The negative correlation between gold and the US dollar has also played a significant role. Since gold is typically priced in dollars, a weak dollar means investors pay more for the same amount of gold. The collapse of Silicon Valley Bank and other institutions in March rattled confidence in the US financial system and the dollar, boosting gold demand.

Ken argues that the rate of decline is worse than the chart represents, especially when compared to the upward trend of gold.

One of the biggest catalysts for Gold

The Federal Reserve has been aggressively raising interest rates for over a year in its ongoing battle to bring down inflation. The latest inflation numbers suggest the Fed is making progress in getting prices under control. Additionally, an unexpected banking crisis in March tightened the credit market, helping cool the economy and slow inflation. Investors now anticipate the Fed will pause rate hikes and pivot to rate cuts sooner than previously anticipated. Gold, widely considered an alternative universal currency that earns no interest payments or other cash flows, historically has a negative correlation to interest rates.

Gold as Insurance

Gold is not a get-rich-quick scheme. Instead, it serves as insurance to protect your wealth and spending power against unforeseeable events. As a reliable store of value, gold provides a hedge against economic instability, geopolitical turmoil, and the devaluation of fiat currencies. By incorporating gold into your investment portfolio, you can safeguard your financial future and maintain purchasing power even during times of market volatility and uncertainty.

Privacy & Security: Benefits of Owning Gold

In today’s digital age, privacy and security are paramount, and owning gold offers a unique advantage in this regard. Unlike digital assets or bank accounts, gold is a tangible asset that can be privately held and securely stored without the need for intermediaries. This allows you to maintain control over your wealth, free from the risks of cyberattacks or financial surveillance. By owning gold, you ensure a level of financial privacy and security that few other investments can provide, giving you peace of mind in an increasingly uncertain world.
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