King: What Rising Gold Means to You

The MSM jumped on the bandwagon. The 2024 Gold Rush has begun. April 24, 2024 [WEBSITE]( | [UNSUBSCRIBE]( King: What Rising Gold Means to You BYRON KING Dear Reader, The Financial Times proclaims in a banner headline, “Gold is back,” and its “surge may herald a whole new world.” According to a recent report from Citibank, gold will “shine bright like a diamond” in an odd mix of mineralogical and metallurgical metaphors. Grammar aside, Citi analysts expect the price of gold to increase to over $3,000 per ounce by the end of 2025. With similar bullishness, soothsayers at Goldman Sachs predict $2,700 gold by year’s end, well above the recent mid-April high of just over $2,400. I could continue and list other fist-pounding forecasts for gold by big-name news sites and investment houses that augur higher prices for our favorite metal. Another way to say it (except they’re not actually coming out and saying it) is relative to precious metals, the dollar is rapidly declining in value and will continue to do so. Here’s something else: it’s not just that we have all these bullish predictions of higher gold prices. It’s that precious metals are even being mentioned in mainstream media, and the recent upward price moves are front-page news. I’ll expand on all of this in just a moment. Meanwhile, here at Paradigm Press, we’ve covered gold and silver for many years. We often write about the value of precious metals and how to invest in them either as physical metals or via mines and royalty plays. If you’re a long-time subscriber, you're already well ahead of current thinking. If you bought physical metal in the past couple of years, you’re in tall cotton just now. Or, if you’re new to the franchise, you’ve come to the right place for solid insight, analysis, and investment ideas. Newfound Interest After Many Years This newfound media and institutional interest in gold, in particular, comes after years of neglect toward the yellow metal. Indeed, the collective mainstream of economic, banking, investment, and academic establishments has long treated gold harshly. Even when gold has its periodic good days, the world’s monetary and banking bigshots view the substance as just another pet rock, an irrelevant artifact of a long-lost gilded age (figuratively, if not literally). In Washington, D.C., within the Treasury and Federal Reserve Buildings, gold is an annoying adjunct to the finely tuned, highly integrated world monetary system. And no serious government official ever wants to speak about what’s inside the vaults at Fort Knox. But considering the recent pro-gold headlines, it's fair to say that something has changed. Doubtless, part of the new attitude is how people “talk their book,” as the saying goes. We’re in an era when large sums of money are obviously moving into gold. Central banks, large institutional investors, wealthy individuals, and others are buying gold, and individuals are even buying, as we see with the news that Costco has sold over $200 million of gold ingots to retail customers every month lately. Something is happening, yes? Thus, big media and banking houses like Citi, Goldman, etc., must position themselves along the pathway of the funds to take a few cuts along the way. Hey, it’s business. “Barbarous Relic?” Smile When You Say That… Still, for all the current rah-rah about gold, there’s that legacy of past disdain toward the metal. It’s best summed up in dismissive comments that we’ve probably all heard on occasion, along the lines that gold is a “barbarous relic.” That’s actually a misquote of economist John Maynard Keynes, who in 1923 wrote that “in truth, the gold standard is already a barbarous relic” (see A Tract on Monetary Reform, ch. 3.) So to be accurate, per Keynes, the gold standard is a barbarous relic, not gold itself. Even on that point, though, Keynes was wrong. Over the past century, history demonstrates how an unbacked, unanchored currency (aka fiat money, issued with naught but political backing) tends to lose value (lose most of its value, actually) over time due to government overspending and long-term inflation. Along these lines, consider the true value of an ounce of gold. And no, it’s not necessarily reflected in the daily price quote in terms of dollars, yen, pounds, euros, etc. It’s better to look at the value of gold as inherent in the metal itself, the idea of “gold is money,” which is what intelligent people used to think. Begin with the immutable fact that an ounce of gold is always worth an ounce of gold. More specifically, let’s look at this beautiful U.S. gold coin from 1923, from back when Lord Keynes made his famous comment. It’s a $20-face value St. Gaudens “Liberty” from that era, weighing just over an ounce (1.179 oz., to be exact): 1923 U.S. St. Gaudens $20 gold coin. Courtesy USACoinbook.com. This coin was standard-issue U.S. currency in the time of Keynes, produced and distributed by the U.S. Mint, and widely used in circulation both at retail and in banking. You could spend it in the U.S. or across the world, anywhere, anytime, no questions asked. People everywhere would take your gold. And back in 1923, this gold coin was worth the grand sum of… $20! Although, to be sure, $20 in 1923 was quite different from $20 today, and that’s among the keys to understanding here. According to the U.S. Bureau of Labor Statistics, at a site called “[CPI Inflation Calculator]( $20 from 1923 requires almost $370 today to offer the same purchasing power as a century ago. In other words, per our federal government, that $20 from 1923 has lost over 94% of its purchasing power over time due to inflation. And how about a different method of comparing value then-versus-now? Because over the past 101 years, this 1923 gold coin has gained in dollar value to where it's advertised today on, say, eBay in the range of $2,600 to well over $3,000, depending on quality, or what’s called “mint state.” Aside from nicks, dings, scratches, or perhaps a bit of tarnish over time, nothing else about the 1923 coin has changed. The coin contains .9675 troy ounces of gold, and overall, the composition is 90% gold and 10% copper, the latter added by the mint to harden the alloy. Over 100 years later, it’s the same piece of metal. That old 1923 coin has just shy of an ounce of gold, making the metal worth about $2,300 today. Do the math; divide by $20 to get 115, which is more than the 94% decline per the U.S. government statistic. The difference between the two numbers reflects the vagaries of calculating the government CPI versus an exact market price for gold. So, we’re back to the idea of holding gold in hand over the long haul versus trusting the government’s currency. And still, some people say that gold is a barbarous relic, eh? Yeah, right, professor. We should all have such barbarous relics in our pockets or strongboxes. [Are you worried about “Biden Bucks”?]( All you need to protect yourself and your money is this secret gold investment you see here. This new alternative gold currency is the perfect way for you to sidestep “Biden Bucks” while preserving your wealth at the same time. Just watch this [quick 2-minute video]( for all of the details… [Click Here To Learn More]( What’s Driving the Gold Move? Okay, enough history and theory. Let’s now address some reasons why gold has recently been rapidly rising in dollar terms. Again, we return to the earlier point that gold is gold; the metal doesn’t change. But what does move is the relative value of dollars in which gold is priced. That is, at one point last fall, an ounce of gold posted a price of about $1,850, and in the second week of April 2024, that same ounce traded at over $2,350, a move of over 27% in about six months. Clearly, the dollar is falling from favor relative to gold. What happened? Perhaps we’ve reached a tipping point of so-called “full faith” in the U.S. government and its currency. Just consider the U.S. national debt of well over $34 trillion, which accumulated in the past two decades under Presidents Bush, Obama, Trump, and Biden. People everywhere have watched this debt monster grow, and now, at this point — the early innings of a looming monetary transformation — smart money is ditching dollars and moving into gold. It’s a de-risk and safety trade in many respects. U.S. government, quarter-century national debt blowout. Courtesy St. Louis Fed (FRED). So, there’s all this national debt, plus the fact that it’s growing like gangbusters. In fact, current growth in the debt is in the range of a trillion dollars every three months or so, courtesy of the Biden administration/Congressional spending machine. And yes, it’s bipartisan. This brings us to a related issue: the interest payable on the debt, which has grown immensely based on the Federal Reserve's rising rates in the past two years. Currently, interest on the debt is in the range of a trillion dollars (a thousand billion bucks) every six months or so. U.S. interest paid on the national debt has accelerated recently. Courtesy St. Louis Fed (FRED). To illustrate the size of just the interest payout (i.e., excluding the deficit spending that grows the debt as well), March 31 marked the end of the second quarter of fiscal year 2024, and in just that timeframe, the U.S. government had paid out over a trillion dollars of interest, an amount which exceeds the entire defense budget. The long and short is that the U.S. is deep in debt. That debt is growing rapidly, while interest payouts are well into the ruinous phase. The U.S. economy and tax base cannot support this. Another way to say it is that the U.S. debt position is unsustainable, and something must give, sooner or later. At some point, the U.S. will likely experience a currency crisis. Again, the smart money knows this and is moving into hard assets like gold (and silver, other minerals and metals, energy, freshwater, land, and other “real” things) to retain value over time until the economy and society emerge from this hurricane. Meanwhile, as if the gargantuan debt and interest levels are not bad enough, another hit to the strength and credibility of the dollar has been U.S. and Western sanctions on Russia due to the latter’s Ukraine special military operation. The short version is that the U.S. government has sanctioned the bejeezus out of innumerable things Russian, meaning people, companies, and even the Russian government. These sanctions included freezing about $350 billion of Russian state assets in Western banks and other facilities. In essence, Russia retains ownership but can’t move its own money around. In recent months, there has been talk in political circles of actually seizing the Russian funds and forfeiting them, perhaps to give to Ukraine or some other end state. Whatever happens in all of this, the idea that the U.S. government might seize dollar-denominated assets of another sovereign state — definitely Russia, a superpower nation with over 6,000 nuclear weapons in its arsenals — is shocking to other governments and institutions across the world. If you read up on it, you’ll see words like “brigandage,” “piracy,” “banditry,” and more, all applied to the U.S. government. In essence, Washington's signal to people, institutions, and governments across the globe is that the U.S. is a lawless state run by thieves and pirates. Thus, it’s best to de-dollarize as much as possible. One way to do that is to take dollars and buy gold. So, What's a Person to Do? It’s all pretty depressing, yes? All that debt, all that interest. Political signals from people in Washington that all but tell the world to ditch dollars and buy gold. What should you do? Well, you should buy gold, too, and silver, other minerals and metals, energy, and more. Own real things that hold value over time, in whatever denomination. You’ve seen the news and numbers, right? The gold price recently increased to over $2,400 per ounce, although there was a pullback in the following days. Silver went over the $29 per ounce level, another long-time high, again with a pullback. If you want to own physical gold and silver or add to an existing stash, it’s not too late. Right now, your emphasis ought to be on bullion versus any sort of old coins or other numismatic items. Just go for the metal, not the story of what’s engraved on the faces. Along these lines, we at Paradigm Press work with the Hard Assets Alliance, a company that’s independent of us but with which we also have a financial relationship. If not Hard Assets, many other companies will sell you basic gold and silver. You’ll find them all over the internet. Just be careful how much they mark things up over the spot price. As for mining plays, it’s fair to say that the interest in gold and silver has not (yet) really moved the equity side, although any number of the best companies have shown solid, recent price moves. Here are a few of the best names, which I follow but are not official portfolio recommendations here at the Rude: We’ve often mentioned the biggest gold miners, Barrick (GOLD) and Newmont (NEM). They tend to be Wall Street favorites because of their size and the ease and liquidity of large funds to buy in and out. Other smaller companies in the top echelons of mining, with great assets and superb technical and management teams, include Alamos Gold (AGI), Kinross Gold (KGC), and IAM Gold (IAG). These companies all have market caps of over a billion dollars and are readily tradable. Finally, I’ll mention a true up-and-comer that works in Alaska called Contango Ore (CTGO). The company is now mining gold-bearing rock and stockpiling material for Kinross to process. So it’s pre-cash flow, but due to begin gold output later this spring and into summer. Once the money hits the cash register, I expect this one to take off. Again, the takeaway from this note is that gold is moving, and you should understand why. So position yourself defensively in terms of inflation and an ongoing, evolving decline in dollar purchasing power. As I noted before, you want to come out on the other side of the hurricane with your wealth intact, and precious metals are one way to do just that. Thank you for subscribing and reading. Best wishes… Byron W. King Rate this email Like Dislike Thanks for rating this content! Looks like something went wrong. Please try to rate again. In Case You Missed It… The Kickboxing Economist SEAN RING It’s a peculiar sight, witnessing a menacing UFC fighter like Renato Moicano expound on the teachings of one of the world’s most renowned economists. Yet, that’s exactly what happened after his TKO victory over Jalin Turner at UFC 300 ten days ago. I’m not a UFC fan, nor am I that into mixed martial arts. But I admire athletes in general, especially those who know anything about the way the real world works. Not many do. So when Moicano’s advice hit the airwaves, I was stunned. He said, “I love America, I love the Constitution...I want to carry...guns. I love private property. Let me tell you something. If you care about your...country, read Ludwig von Mises and the six lessons of the Austrian Economic School.” Wow. Just, wow… Dr. Jonathan Newman wrote on [mises.org]( that they’d seen 50,000 downloads of Mises’s book, Economic Policy: Thoughts for Today and Tomorrow, and the hardcover copies have sold out since Moicnao’s speech. If only all athletes had such a positive influence! What’s so special about Mises’ book? It’s a series of lectures Mises gave in Argentina in 1959. The book serves as an excellent introduction to Mises's views on economic principles, with a special urgency as he encouraged Argentina to turn from dictatorship and socialism towards full liberty. The lectures cover topics such as capitalism, socialism, interventionism, inflation, foreign investment, and economic policies and ideas. Let me give you a taste of each. 1st Lecture: Capitalism Today, in the capitalist countries, there is relatively little difference between the basic life of the so-called higher and lower classes; both have food, clothing, and shelter. But in the eighteenth century and earlier, the difference between the man of the middle class and the man of the lower class was that the man of the middle class had shoes and the man of the lower class did not have shoes. In the United States today the difference between a rich man and a poor man means very often only the difference between a Cadillac and a Chevrolet. The Chevrolet may be bought secondhand, but basically, it renders the same services to its owner: he, too, can drive from one point to another. More than fifty percent of the people in the United States are living in houses and apartments they own themselves. 2nd Lecture: Socialism The fact is that, under the capitalistic system, the ultimate bosses are the consumers. The sovereign is not the state, it is the people. And the proof that they are the sovereign is borne out by the fact that they have the right to be foolish. This is the privilege of the sovereign. He has the right to make mistakes, no one can prevent him from making them, but of course, he has to pay for his mistakes. If we say the consumer is supreme or that the consumer is sovereign, we do not say that the consumer is free from faults, that the consumer is a man who always knows what would be best for him. The consumers very often buy things or consume things they ought not to buy or ought not to consume. But the notion that a capitalist form of government can prevent people from hurting themselves by controlling their consumption is false. The idea of government as a paternal authority, as a guardian for everybody, is the idea of those who favor socialism. In the United States, some years ago, the government tried what was called “a noble experiment.” This noble experiment was a law making it illegal to buy or sell intoxicating beverages. It is certainly true that many people drink too much brandy and whiskey, and that they may hurt themselves by doing so. Some authorities in the United States are even opposed to smoking. Certainly, there are many people who smoke too much and who smoke in spite of the fact that it would be better for them not to smoke. This raises a question which goes far beyond economic discussion: it shows what freedom really means. 3rd Lecture: Interventionism What is interventionism? Interventionism means that the government does not restrict its activity to the preservation of order, or—as people used to say a hundred years ago—to “the production of security.” Interventionism means that the government wants to do more. It wants to interfere with market phenomena. If one objects and says the government should not interfere with business, people very often answer: “But the government necessarily always interferes. If there are policemen on the street, the government interferes. It interferes with a robber looting a shop or it prevents a man from stealing a car.” But when dealing with interventionism and defining what is meant by interventionism, we are speaking about government interference with the market. (That the government and the police are expected to protect the citizens, which includes businessmen, and of course their employees, against attacks on the part of domestic or foreign gangsters, is in fact a normal, necessary expectation of any government. Such protection is not an intervention, for the government’s only legitimate function is, precisely, to produce security.) [Bloomberg: “Elon Musk Will Become a Trillionaire With [This Company]”]( As soon as December, Elon Musk could take yet another company public… One that could instantly become the biggest IPO in U.S. History… AND make Elon the world’s first trillionaire in one single move. But it won’t just be good for Elon… Because technology analyst Ray Blanco discovered another company… One that could be a hidden “backdoor” way to profit thanks to the ‘trillionaire-making’ company Elon is building right now. [Click here for the full story](. [Click Here To Learn More]( 4th Lecture: Inflation There can be no secret way to the solution of the financial problems of a government; if it needs money, it has to obtain the money by taxing its citizens (or, under special conditions, by borrowing it from people who have the money). But many governments, we can even say most governments, think there is another method for getting the needed money; simply to print it. 5th Lecture: Foreign Investment Foreign investment meant that British capitalists invested British capital in other parts of the world. They first invested it in those European countries which, from the point of view of Great Britain, were short of capital and backward in their development. It is a well-known fact that the railroads of most European countries, and also of the United States, were built with the aid of British capital. You know that the same happened in this country, in Argentina. 6th Lecture: Politics and Ideas What had taken place? What was the problem? What was it that caused the disintegration of an empire which, in every regard, had attained the highest civilization ever achieved before the eighteenth century? The truth is that what destroyed this ancient civilization was something similar, almost identical to the dangers that threaten our civilization today: on the one hand, it was interventionism, and on the other hand, inflation. The interventionism of the Roman Empire consisted in the fact that the Roman Empire, following the preceding Greek policy, did not abstain from price control. This price control was mild, practically without any consequences, because for centuries it did not try to reduce prices below the market level. Wrap Up I bet that last one sent a chill up your spine… Of course, comparing Rome's downfall to what’s happening now is nothing new. Remember, these lectures were given in 1959! Honestly, I hadn’t read this pamphlet until I heard some big fighter tell the world to read more Mises. It’s a fantastic and easy refresher. [You can find it right here, in many html, epub, and pdf forms.]( It’s free, and if you have some free time, this book is well worth your while. All the best, Sean Ring Editor, Rude Awakening Twitter: [@seaniechaos]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. 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