A broader view....taken from Mike MalonyThe world economy is at the brink of a deflationary spiral. Governments and central banks are taking desperate measures, flooding the global economy with currency in the form of stimulus packages, bailouts, deficit spending, cheap credit, and negative rates, all in an effort to ward off deflation.
The problem is, as growth stagnates and declines, paying off the debt will become impossible. The strength of the U.S. economy and its financial standing are shakier than at any other time in history. The national debt is now $19.4 trillion, with total US debt over $66 trillion. Throw in unfunded liabilities, such as Social Security and Medicare, and the total reaches a whopping $103 trillion. These figures are not sustainable, nor repayable!
Gold Will Be the Center of the Wealth Transfer
Although we have no empirical data before the establishment of the U.S. Federal Reserve, it appears that the free market has periodically revalued gold—increasing its value to account for the excess currency in circulation—time after time, for the past 2,400 years.
This lesson from history tell us that the free market will bid up the price of gold until the value of the gold is once again in equilibrium with the value of circulating currency. And with a world economy more interconnected than ever before, and with every currency in the world now fiat, we can expect the free market to push gold prices high enough to account for all currency now in circulation around the world. If this happens, it will be nothing unusual… just be history repeating itself.
In the long run, inflation is inevitable, as governments and central banks continue implementing inflationary policies to lower the cost of debt, avoid deflation, and stimulate their economies. The more currency floating around, the higher the price of gold and silver will ultimately rise. That’s because throughout history, every time a nation has debased and finally destroyed its currency, the free market has chosen gold and silver as the ideal money.
But the massive expansion of currency supplies around the world has created conditions ripe for a currency crisis of massive proportions.
Ultimately, gold will not only benefit from the massive expansion of the currency supply, but it will also benefit from the global currency crisis that lies in wait.
During these upcoming crises, it is nearly certain that holders of gold and silver will be the beneficiaries of the wealth transfer that will occur as the entire globe rushes into the safe haven assets. The coming rush to precious metals will be a completely different type of bull market, because not only will you get the buyers looking for opportunity, but panicked investors trying to salvage their wealth.
The coming monetary crisis will offer an once-in-a-lifetime opportunity that will benefit from both fear and greed at the same time. In fact, I believe it will be the greatest opportunity in history.
Gold and silver rising in value against fiat currencies is inevitable. As Mike stated in his book,
“it is as certain as the sunrise.”