Last week I talked about the latest drawdown in gold prices, and how we could be scooping out a bottom. There’s no one on this planet who knows for sure where short term prices are headed, though.
But we’re in this gold trend for the long term – for the same reason we’ve seen prices crawl higher for the past 50+ years… for the same undeniable reason that the US dollar is doomed to continually devalue.
And listen… this trend we’re in now isn’t just another commodity supercycle, which itself would be a significant enough reason to stay the course with gold stocks in the coming years.
Historically, commodity supercycles coincide with downturns in securities, and last 8-12 years or so before a new bull market begins in stocks.
We’re living through a commodity supercycle that’s teamed up with a once in a lifetime currency revolution – coming together to boost prices not just in gold but in everything you and I need to live normal, prosperous lives: energy, food, real estate – you name it.
And if you’re wondering why this supercycle also seems to be in lockstep with stock prices ripping ever higher, part of the reason is due to the currency revolution.
The price of everything rising also includes stocks. The water is so muddied right now because people who own dollars are ditching them for any and every asset as fast as they can.
The “price” of a decent retirement denominated in dollars has also skyrocketed, as you may have noticed.
It’s almost impossible to get an idea of how quickly assets are really rising in price because the dollar itself is becoming an increasingly unreliable yardstick.
If stocks go up 12% and gold goes up 30% while (real) inflation is 10%, it’s hard to tell just how poorly stocks are doing in comparison to gold.
And I want to be very clear: the structural problems with the US dollar, our deficits, our future unfunded liabilities, and the inevitability of inflation are not a partisan, political issue.
There is no serious fiscal or monetary steward anywhere near the levers of control in Washington DC.
The real problem is much more serious – and it’s the reason why there’s really no hope for “reform” in any meaningful sense to save the dollar.
It goes back to the end of gold convertibility – which while imperfect, was the ONLY real constraint on Federal deficits.
Remove the constraints on such a system, and you’re basically guaranteeing an inflationary disaster sooner or later.
We’ve already lived through the “sooner” of 50+ years of creeping prices. Now we’re getting to the later.
I believe we’re headed towards a currency crisis that’s going to squeeze many people in a way that Americans haven’t really experienced since the Great Depression. That’s most of us, alive today, with zero experience for what could come next.
That even includes many retirees who were born in the 40s and 50s – people who still remember the belt tightening of the 1970s stagflation – but don’t have a living memory of the Great Depression.
And I believe so strongly about this possibility that I’ve put together a presentation called “The American Retirement Dream.”
People at or near retirement with fixed incomes are really going to be up against it – because there is no political will to bail out Social Security, or to raise benefits for pensioners in tune with inflation.
This trend is not going to be fixed or stopped or prevented by anyone. It’s up to individuals to take the relatively simple steps to help themselves.
There is no cavalry. It’s just you and your retirement against what I believe will be extremely destructive currency devaluation.
Don’t let this trend overwhelm you: take a look at my free presentation here.
Best,
Garrett Goggin, CFA, CMT
Lead Analyst and Founder, Golden Portfolio