Why I think it’s time to buy gold

Tuesday, 12 December 2023 — Melbourne, Australia

[5 min read]

Dear Reader,

We’re fast approaching the end of 2023.

If anything, this year’s events — inside our country and around the world, have shown us that reality is wilder than fantasy.

Look at some of the major events that defined this year.

The ongoing Russia-Ukraine conflict.

The Israel-Palestine conflict raging in the Middle East, threatening to spread to neighbouring regions.

The political and legal circus in the US involving the two leading candidates, Joe Biden and Donald Trump, as next year’s presidential election looms.

The rising tide of nationalism sweeping through the world, led by New Zealand, Argentina and The Netherlands.

Even in Australia we’ve just seen during the weekend the Queensland Premier, Anastasia Palaszczuk, announce her resignation. She is the last of the surviving premiers who governed during the Wuhan virus outbreak.

And our country has started to wake up to the reality of the corruption of our political class and the media’s dishonest narratives to cover for them.

These events are remarkable.

More striking is the way news sources portray these events. Depending on what you read, your perspectives will differ on what’s happening, resulting in more discord in our society.

I’m sure most of us are hoping that 2024 sees some semblance of sanity return.

Of course, few would bet their house that it’ll play out this way.

How did we get here?

Where are we heading?

How can you prepare?

Let’s explore this today…

Identifying the source of chaos

Regular readers will know where I stand on economics, geopolitics and the financial markets.

In the past, I’ve pointed out how the fiat currency system is the source of the world’s malaise. Fake money creates a dishonest society.

It’s now so pervasive it threatens the veneers of a civil society.

We live in a world that can manipulate the value of the efforts of your labour and productivity. Central banks set the interest rate that impacts asset prices and in turn, economic activity.

Since the subprime crisis in 2008–09 till mid-2022, we’ve seen an extended period of near-zero interest rates. This policy initially intended to boost economic activity and avert a total market collapse.

Instead, we’ve seen rampant speculation.

The world gradually diverted more capital into financial assets than physical productivity. Asset prices keep setting new records. Capital moved to financial institutions, widening the wealth gap everywhere.

Meanwhile, businesses in Main Street and ordinary households struggle to make ends meet. They couldn’t benefit much from the avalanche of cheap capital. Instead, they forked out more as inflation hit hard.

At the same time, large corporations and non-government organisations ramp up their influence in politics and public discourse. To this end, we’ve seen censorship, suppressing truth and outright abuse of political power in many democratic nations.

They used to exercise their powers discreetly so the decay is unnoticeable. But it’s now more obvious as the economy crumbles.

Reclaiming control of your life as the global information war turns

Our society has evolved over time to make it hard for people to take a dissenting view.

While many of you are aware of the blatant lies, you might still prefer to hold your tongue around your family, friends and colleagues.

For a long time, most prefer the comfort of going along. They realise that the-powers-that-be won’t let up on controlling society.

Speaking the inconvenient truth might put you at risk of isolation, even direct threat to your livelihood.

Add to that the increasing reliance on debt to own your home and enjoy life’s luxuries. That debt acts as a ball and chain to keep people’s head low.

Faced with speaking up and potentially losing your job, what would most people do?

Talk about a dilemma!

All of this is by design.

But things have been shifting, and I think it will gain momentum next year.

We’ve seen things play out in the global information war via social media. Once Elon Musk purchased Twitter (now X) last October, we’ve realised how it operated as a sophisticated censorship machine.

Not only that, these platforms colluded together to try to keep the illusion going.

Many large corporations including Disney, IBM, Apple, etc. have engaged in double standards. They’ve recently lined up to boycott X, preferring sites friendly to their ideology, such as Facebook. This is despite government agencies revealing and condemning them for criminal activity, including aiding in child sex exploitation.

The revelation of this vast corruption has spurred people around the world to stand up. Many realise they’re almost at breaking point and have little to lose.

Think of the farmers in France, Canada and The Netherlands who are taking on the government. French farmers have recently sprayed government buildings with manure to show their anger at the Macron government’s climate policy.

I’d like to think these farmers are proposing their version of The Green Agenda!

Preparing for what’s to come with gold

Now I’m not advocating that we resort to taking drastic actions here.

Rather, I’m highlighting the need for a strong foundation at home. This means keeping your finances under control to weather next year’s rising turbulence.

Interest rates may have peaked, but costs are likely to keep rising. Many major corporations are set to cut jobs to save on costs.

Don’t let that squeeze you out!

If you do, forget about standing up for what’s right! You might instead find yourself dancing to the tune of your paymasters.

What’s my take on how you could prepare?

I’ve recently written (here and here) about my experiences in Hong Kong.

My view is that gold can help the locals in Hong Kong alleviate the daily challenges they face.

As I’ve been talking about this in the past month, notice how gold has gained momentum. Have a look below:

Moreover, gold in US dollars traded as high as US$2,130 an ounce for the first time last Monday. It’s set a new record.

The price has since pulled back 6% to just above US$2,000 now.

That’s ok. I believe there’s renewed interest now that gold has made a new record.

Now I mentioned earlier that interest rates have likely peaked. The market has positioned itself for rate cuts to begin sometime in 2024.

Have a look to see what happened with gold the last three occasions the interest rates fell (2008–09, 2019 and 2020):

This should spur you to consider buying gold and getting in before the rush.

There’s another way to help strengthen your portfolio with gold.

Gold had a great run in the last three years as you saw in the figures above. Meanwhile, gold mining companies haven’t performed as well as gold.

This lull has caused many investors to ignore them.

To me, that’s a great reason to pay attention.

Interested? Then click here to learn more about my ‘Ultimate Gold Game Plan’.

God bless,

Brian Chu,
Editor, Australian Gold Report and Gold Stock Pro

Brian Chu is one of Australia’s foremost independent authorities on gold and gold stocks, with a unique strategy for valuing big producers and highly speculative explorers. He established a private family fund that only invests in ASX-listed gold mining companies, possibly the only such fund in Australia, putting his strategy and research skills to the test under public scrutiny. He currently writes two gold focussed investment advisories.

In his monthly Australian Gold Report Brian shows you a strategy for building long-term wealth in physical gold, along with a select portfolio of hand-picked stocks, mainly producers with proven revenue streams, chosen for their balance of risk and reward.

In his more specialised Gold Stock Pro service Brian helps readers trade some of the most exciting, speculative gold mining plays on the ASX. He uses his proprietary system — based on the famous Lassonde Curve model, which tracks the life cycle of mining stocks. His aim is to help you get ready to trade the next phase of gold and silver’s anticipated longer-term bull market for opportunities to benefit.

[3 min read]

Dear Reader,

Michael Snyder:

Say Goodbye To The Middle Class: Half Of All American Workers Made Less Than $40,847.18 Last Year

If you are wondering why so many Americans are stressed about their finances these days, just look at the numbers. The Social Security Administration just released national wage statistics for 2022, and the figures that they have given us do not paint a pretty picture at all. In particular, we should all be deeply alarmed that the median wage earner brought home just $40,847.18 last year. That breaks down to about $3,400 a month, and that is before taxes. Needless to say, you cannot live a middle class lifestyle in America today on just $3,400 a month before taxes. So in most households more than one person must work, and in many cases more than one person is working multiple jobs.

More formerly middle class Americans are falling into poverty with each passing day, and this is causing an alarming surge in demand at food banks from coast to coast…

Economic conditions have deteriorated substantially in 2023, and I am entirely convinced that 2024 will be even worse…

And here’s Business Insider:

…Americans are drowning in credit-card debt — and …the economy will pay the price

Record credit-card debt threatens to spark a consumer-spending slowdown soon, Carl Weinberg said.

’Consumers are just waking up to the fact that they're financing their spending by running up their credit cards, and that the interest on those credit cards is over the top, out of control, off the hook right now,’ Carl Weinberg told CNBC on Wednesday.

Musk painted a similar picture in October. ’A large number of people are living paycheck to paycheck and with a lot of debt,’ he said, noting credit-card payments have hit ’extremely punishing’ levels. ’If you cannot pay them off and you're still accruing interest at 20%, you're at best headed to a bad place.’

Slip Slidin’ Away

A bad place is where we think we’re headed. So let’s continue trying to understand how we’ll get there. As you recall from last week, the period — 1950–1980 was fine. Then came a bewildering 40-year stretch, 1980–2020 should have been the most astonishingly rich period in our history. It turned out to be a big flop. Despite some of the most remarkable technological innovations ever, growth rates declined. Real wages stagnated. By almost all comparisons and indicators, the US slipped down.

‘What went wrong?’ is the most important question in modern economics. Didn’t the Fed stimulate enough? Nope, it couldn’t be that…the Fed never before stimulated as much as it did then, especially in the last half of that period.

Bad luck? Where? How? In the 13th century, the plague struck Europe and wiped out an estimated one-third of the population. That was bad luck. In comparison, COVID was a gentle nuisance. There were no major plagues in the last 40 years. No real climate disasters. No giant meteors crashed into the earth.

So, what went wrong? One hypothesis: most of the progress of the last 150 years came from fossil-fuelled machines. And that breakthrough may have reached a natural point of declining marginal utility by 1980. You could add more and better machines; but you got only marginal, incremental gains.

But that wouldn’t seem to explain the entire slowdown…and it certainly doesn’t explain how the gains, such as they were, went overwhelmingly to the elites. And it is perhaps more than a coincidence that this period also saw a breathtaking surge in the number of elites themselves — PhDs, engineers and scientists, but also social engineers, policy makers and political hacks. All of them went to work to try to improve the material conditions of our lives.

Did they all fail? Or did the weight of so many improvers drag down the whole economy?

A Heavy Hand

One of the most insidious features of government policies is that the improvers never seem to go away…even when they are disastrously wrongheaded. Wars go on for years — at staggering cost — even though there’s no plausible gain on the horizon. Whole careers are spent fighting the War on Drugs or the War on Poverty, for example, with no sign of victory. Agencies, projects, commissions, departments…the list grows; it never shrinks. The feds announce an outfit intended to deal with an emergency. The group gets titles, office space and a budget. It goes to work…and is never heard from again. It becomes as eternal as sin, comfortably camped in luxury on the bayous of Washington DC…while the limelight moves on to the next crusade.

This is not unique to the US government. It is a feature of government itself. Over time, the swamp of lame programs, freeloading clients, and jackass crusades gets deeper and deeper. And then, the going gets tough. Entrepreneurs, reformers, and the sweating multitudes, struggle through the muck of regulations…and drown in the slime of politics.

But wait. What does this mean? Is the middle class doomed? How about the US itself? The stock market?

There’s more on the subject of ‘what went wrong,’ tomorrow…

Regards,

Bill Bonner,
For Fat Tail Daily