When Gold Does This Empires Fall

Gold's rise recently has been nothing short of spectacular. In fact, it has more than doubled in the last two years. Unfortunately, historically, when gold makes moves like this, empires have a tendency to fall. So why is gold making these moves now? And what is it trying to tell us about the current state of the economy and the world? It's important to note that central banks are some of the major buyers of gold right now. In fact, central banks have been buying gold so much that gold holdings are now a larger percentage of foreign central bank reserves than U.S. treasuries are. As you can see from this chart, treasury holdings as a percentage of foreign central bank reserves have been declining for quite some time now while gold has been rising. The last time we got a big rise in gold was right before 2020. Starting in July of 2019, gold broke out from a years-long channel and rallied all the way to August of 2020. It's important to remember that when gold began its rise mid-2019, none of the money printing from 2020 had started yet. But gold has a tendency to sniff out future monetary policy, specifically the consequences of that monetary policy. And if you had been paying attention to gold, you would have been positioned well for the unprecedented level of inflation and money printing that central banks were about to unleash on the world. And it's no coincidence that gold has the ability to do this, and it's because the people who make the monetary policy decisions, central banks, are some of the main buyers of gold. So it stands to reason that large moves in gold would precede large moves in monetary policy. But this is something that has been taking place for hundreds and even thousands of years. This is not something that is new. For example, take a look at this chart, which is the value of one gold mark priced in paper marks during the hyperinflation that took place in the Weimar Republic in Germany. In other words, this is the price of gold relative to their fiat currency. You can see it looks like a hockey stick. And you may be able to see the similarities in the shape of the chart when we look at the price of gold in paper dollars, our fiat currency. While the percentage move is not as extreme, the shape is the same. And as you'll see, this is the central reason why large moves in gold tend to correspond with falls in empires. Because when a government cannot control its spending and inflates its money into oblivion, it destroys the power it had to print the money that people used in the first place. But it doesn't mean that there's nothing that you can do about it. For example, there are trends that tend to appear across markets that if you are aware of, you can take advantage of them. For example, large moves in commodities tend to take place after large moves in gold. And while we've seen some good performance out of base metals, we haven't seen anything like what we've seen in gold yet. And the same thing can be said of energy. While we've seen good performance recently, we've only recently broken out from the long-term consolidation pattern and the move in gold would suggest that we have a long way to go from here. And if you'd like to know my exact strategy for how I'm playing the commodities super cycle, I am holding a free event this Sunday. It's coming up depending on when you're watching this. Maybe tonight is Sunday, February 22nd at 7 p.m. Eastern time. It's completely free, but spots are limited. So do not wait because this might be your last chance to register. I'm going to teach you the strategy that I use that requires no margin, no futures, no leveraging your account for crazy risk or anything like that. I've been using this strategy in my own account to take home triple and even some quadruple digit returns sometimes within a matter of months. And on this call, I'm going to teach you everything that I know. I'm looking for a small group of 250 traders that I can take under my wing for the next year to walk you through this strategy trade with me as this commodity super cycle plays out. So if that sounds like something that you're interested in learning more about do not miss out on this call. Again. It is free spots are limited. You have to click on the link in the description below to register and I hope to see you there. So the explosion of the price of gold in the Weimar Republic in Germany is one extreme example, but like I said, it's not the only one. In fact, if we flip this upside down, really what you're looking at is a loss in purchasing power of their fiat currency. And while it is not nearly as quick, we've seen the same thing happen with the US dollar over the last hundred years because of the slow but inevitable spirit crushing inflation. The government has imposed on American citizens. The dollars purchasing power is less than 90% of what it used to be. And this exact same thing has been happening for thousands of years. Consider what caused the decline of the Roman Empire. This is a chart that shows the silver content in coins in the Roman Empire and you can see steadily but surely Roman Emperors continued to decrease the amount of silver in their coins. Keep in mind. This isn't the silver that was getting less valuable. This was the coins that were getting less valuable. The same amount of silver could still purchase the same amount of stuff, but you needed more coins minted by the government by the Emperor in order to buy the same stuff because they had less real money in it. Just like today, the money created by the government gets less valuable. And so you need more government money to equal the same amount of gold. Same story, different Emperor. Now, historians like to point to all sorts of other reasons for the decline of the Roman Empire, the decline of the Weimar Republic in Germany, or any other examples when this has happened throughout history. But the reason why governments decide to debase their money is because it's a short-term pain-free solution, even though it has long-term consequences. Governments get themselves into a position where they have promised to pay people money to give people free things and it is too politically unpopular to say, hey, guess what? We actually can't afford it. But it's also too politically unpopular for the government to say, okay, if we're going to do that, we have to take money directly from other people. And so they try and go the free lunch route where they say, we're not going to take any more in taxes and we're still going to give everything we promised. We're just going to do it by debasing the money. And most people are too financially illiterate to realize they're still paying for it just through higher prices. And guess what? The US government is in the exact same situation today. Most people are aware that the national debt is well over 38 trillion dollars and budget estimates now show that the US government will probably run two, three, four trillion dollar deficits in perpetuity from here. The national debt could exceed 60 trillion dollars within the next 10 years, but that's not even the biggest bad number here. The Congressional Budget Office estimates that the US will have 120 trillion dollars in unfunded liabilities in just 30 years. The obligations to pay for things like Medicare, Medicaid, Social Security, and military spending exceed all the abilities for the US government to pay for it honestly through taxes. And because you cannot borrow your way out of a debt problem, you can only borrow your way further into a larger debt problem. It means this is going to be funded through inflation. That means debt monetization. That means the government looks like they're borrowing money, but they're borrowing it from the central bank, the money printer. And because there's no chance of a balanced budget or especially a budget surplus, there's no chance of the spending slowing down and there's no chance of anybody ever proposing or voting for cuts to spending because the people who receive money from the government like the military industrial complex, big pharma, and seniors will never vote for that. It means they're going to try and deal with it through inflation. It means they're going to try and deal with it the way that Rome did or the way that the Weimar Republic in Germany did. Now, the next phase of this is what the current move in gold is sniffing out. Again, gold is up over a hundred fifty percent in the last two years alone with central banks being some of the major buyers and central banks being the policy decision makers. We know gold is telling us something about the near future, not something a hundred years down the road. I believe that the next chairman of the Federal Reserve, Kevin Warsh, is going to be instrumental in this next phase and that is deregulating the banks because it will be politically unpopular for the Federal Reserve itself to go back into massive quantitative easing, debt monetization, blowing up its balance sheet, buying a bunch of US Treasuries, but if they can get the banks to do it instead, 99% of people will have no idea that it's virtually the exact same thing. And the reality is, it's just one regulation change that needs to take place for banks to do QE for the Fed. Without getting too technical, it's something called the supplementary leverage ratio that tells banks they cannot buy more than a certain number of US Treasuries. All they have to do is remove that restriction and banks can go crazy buying as many US Treasuries as they want. And we know this is true because this actually happened before in 2020. The Federal Reserve temporarily removed that restriction and banks did what they were expected to do. They went and bought a bunch of US Treasuries. Now that was temporary, but they can do it again and they can do it permanently this time. Which means that if you are not prepared for prices to run hot, I'm talking cost of living and I'm also talking assets, then you might be left behind. Gold makes moves like this when it is running in front of major monetary policy decisions. The big boys have protected themselves. The good news is, even if you missed out on that move in gold, the rest of the market is probably about to follow, especially things like commodities and materials and rare earths and energy. And again, if you'd like to follow along with me and learn my exact strategy for how I have been playing this commodity super cycle and how I think it's going to play out for the coming quarters and coming year, then please don't forget to register for my event. I don't know when the next time is that I'm going to run one of these. It's coming up this Sunday, 7 p.m. Eastern Time, February 22nd. Register for it and I will see you there. Link is in the description below. As always. Thank you so much for watching. Have a great day.