Gold is making new all time high and signal higher inflation for longer
Gold is up 10% since SVB's collapse and is already making a new all time high on a monthly basis (see chart). Here's why in the current macro regime gold's rise is inevitable.
#gold is up 10% since SVB’s collapse and is already making a new all time high on a monthly basis (see chart). Here’s why in the current macro regime gold’s rise is inevitable.
The amount of debt in the system made the #federalreserve ‘s inflation fighting job near-impossible. Below from my June 20th 2022 post (https://bit.ly/3TItnaN):
“Consensus has it that the end of the tightening will be a function of economic slowdown and declining CPI. It may not work that way. Given the amount of debt in the system, the risk of a systemic credit event is increasing and may force the Fed to relinquish and, possibly, even reverse action. As liquidity dries up, the signs of distress in the credit markets are starting to show. …. In other words, elevated debt greatly constrains the ability of the Fed to withdraw liquidity and they may need to tilt to “neutral” before inflation is brought under control”
Whether the Fed hikes 25 bps on Wednesday is relatively insignificant as they are already running out of tightening space. The “monetary illusion” of the fiat currency system is starting to evaporate, and investors are beginning to accept what history has shown over and over: the only way to reset debt is through currency debasement.
Over the next few months and years, traditional asset classes will lose value, prompting investors to search for safety in alternatives that are both “real” and scarce. Simultaneously, technological advancements will allow any asset ownership to be converted into a digital token on a decentralised ledger network, thereby unlocking a significant liquidity premium. As a result, the markets for assets like commodities, property, art and private equity will undergo a revolution.
Gold’s price acceleration is a harbinger of much larger changes to come. The global financial system is at an inflection point, and investors who are willing to embrace change will be able to better protect their savings and generate inflation-adjusted returns.
Disclosure: Not investment advice. Do your own research. Hold all assets mentioned. Twitter @pietroventani for more timely comments and updates
