|
One comment I have made from time to time is that the Western world might return to the Gold Standard before long- not by choice, but out of sheer necessity. After the events of the last several days, that theory is looking a bit more plausible.
If you play a game of musical chairs with 20 people and 19 chairs, you have one loser and the remaining 19 players carry on. Or you can make things work via a HEALTHY deficit. Bedford Falls. But what if there are only 5 chairs for 20 people? Does is become every man for himself? Pottersville.
The U.S. Dollar has shown strength in the last couple of years, as the Fed has raised rates and capital has flowed to U.S. shores. The cleanest dirty shirt in the hamper.
Now, with the run on SVB and the growing possibility of stress in the financial system, the question might become: how would we divvy up $5 among 20 people who deposited $1 each? Thus the musical chair analogy.
At that point, the U.S. Dollar ceases to be the go-to reserve currency. We may be close to that moment in time. And without a bonafide fiat alternative, enter Gold.
Give the action in Interest rates (which plummeted) and in Gold (which surged) yesterday, I think we're moving close to this outcome, one which some view as inevitable. Granted it is but one day's action, but wow what a day!!
Few people can describe the issues at stake better than Robert Kientz of Gold Silver Pros. Rob speaks with Dunagun Kaiser below. A GREAT Hour of listening, and it could not be more timely.
My latest Newsletter, BULLS, BEARS, OSTRICHES and SITTING DUCKS can be seen here: https://lnkd.in/ge5JvqgW.
Have a wonderful weekend, all! Unless of course, you have other plans.
|