Quote of the Day
While it is a matter of entrepreneurial judgment and not economic theory to affirm gold’s superiority as the ultimate “store of value” and potentially even as the preferred replacement for fiat monies (though silver has often been a strong competitor to gold for the latter role), I must agree with Lagarde’s assessment of the empirical facts concerning reserve asset competition, not with Powell’s dismissive attitude about gold—when the chips are down and the world is forced to turn to an unconditionally trustworthy reserve of purchasing power, the world will turn to gold. What soaring gold prices might indicate is that the world is now turning to gold.
Vincent Cook
November 28, 2025
Central Bankers Disagree About Gold | Mises Institute
The prices are certainly rising. This is just this year:
I see the stumbling of Bitcoin. I see Trump and Elon fail to get the U.S. deficit under control. I see the mounting U.S. debt becoming a huge, unstoppable monster. I wonder if the price of gold reflects a lack of confidence in the U.S. dollar. I think of the Zimbabwe dollar (I have trillions of them). Our country is not Zimbabwe, Argentina, or Venezuela so if someday we do have runaway inflation, it almost for certain will not be on the scale of those countries. But if it does happen, it could happen very rapidly. These events frequently have high emotional content. It is like someone shouted fire in a large room with not enough exits. A lot of people get trampled who would have survived had everyone remained calm.
And, of course, gold may not be the thing that saves people in a stampede. Maybe it will be guns and ammo to defend against the looters searching for food or even, as in the movie Doctor Zhivago, stealing the lumber from your home to burn for warmth.
If you do decide to buy gold, please remember my advice.
Two parts to this price increase.
First, I hear that the Chinese are buying a lot of gold. More demand, same supply, laws of economics still win.
Second, the price of gold in dollars goes up as the value of the dollar goes down. The dollar has, and continues to, digest the inflationary impacts of out-of-control deficit spending.
At a rough approximation, the dollar is worth 20% less than it was just four years ago. It’s not worth having a savings account any more; get those saved dollars into something that you can re-convert back into fresh dollars at full value just before you need to spend them. We’re not at Weimar hyperinflation yet, but you can see it from here.
I remember reading that the price of a good quality man’s suit, expressed in ounces of gold, has remained roughly constant since the days of Julius Caesar.
When I entered the workforce in 1972, a dollar was worth 7.5x of today’s dollars.
TL;DR: We’re not heading for Weimar-style hyperinflation — we’re heading for 1970s-style high inflation (15–25% if measured honestly) followed by politically forced debt write-downs. Savers get crushed, borrowers get bailed, creditors eventually get haircut. I’m pretty sure the best hedge is hard assets, especially productive commodities and energy.
How this Happens (And It’s Already Playing Out)
High inflation destroys the reward for saving, encourages borrowing
Every historical episode of sustained 10%+ inflation produced the same behavior:
– U.S. 1968–1982 → personal savings rate fell from 11% → 5%
– UK 1973–1979 → savings rate cut in half
– Israel 1980–1985 → savings went to near-zero while 100%+ LTV mortgages exploded
→ People borrow as much fixed-rate debt as banks will give them because inflation is the fastest debt-eraser in existence.
Recession → mass inability to pay → political pressure for debt relief
We’ve done this before:
– PPP loans ($800 bn+ forgiven by adding to US Debt)
– Biden student-loan cancellation attempts (lenders paid in full by adding to US Debt)
– Repeated farm bailouts (and more US Debt)
The debt pile keeps getting larger, which effectively increases the money supply, fueling more inflation.
It starts with publicly funded debt relief. Forgiveness = taxpayers foot the bill (lenders love it)
It progresses to forgiveness = creditors forced to eat 30–70¢ on the dollar (as happened in Iceland 2008–2011, Greece PSI 2012, Argentina ×10)
Corporate bonds, bank debt, and even money-market funds are NOT safe.
– Only three MMFs have ever broken the buck in history — one in 2008 triggered a frozen shadow-banking system until the Treasury backstopped them.
– If the Treasury ever says “no more” (or simply can’t), MMF shares go to $0.90–$0.95 overnight → 2008-style run → forced liquidations → multi-year bear market.
ENDGAME
– Treasury prints or borrows trillions more → inflation north of 20% (1980-method) becomes likely
– U.S. effectively pays foreign creditors in confetti dollars (a stealth default)
– Credit contracts violently → real estate becomes illiquid
To prevent catastrophic financial failure:
– Banks are compelled to buy public debt at below market rates (already happening)
– The Fed lets inflation run at 10%+ for decades to devalue the debt
– We settle into a Japan-style malaise for decades and pray for a growth miracle.
POSITIONING FOR A DUMPSTER FIRE
– Cash and most bonds = guaranteed real loss
– Long-duration fixed-rate debt (if you can get it) = great for borrowers only
– Productive assets (farmland, energy, metals, infrastructure) become the only reliable stores of value
We’ve seen the prequel to this movie. The 1970s ended with Volcker crushing inflation and leaving a mountain of bad debt but ending the cycle. But in this film, the debt mountain is 3–4× larger relative to GDP and the political will to inflict Volcker pain is roughly zero. Our national debt is already growing faster than our economy, even without loan forgiveness funded by public debt. That makes it likely interest payments will eventually crowd out every dime of discretionary spending but not reduce a single dime of taxation. Who wants to live in that world?
The cycle only ends when the pain of continuing exceeds the pain of fixing it. We’re nowhere near that point yet. It all just gets more painful.
Prepare accordingly.
Add to that the gold you bought for $1k/oz and sold for $4k/oz increased in price mostly because of the real inflation rate, but if you declare it on taxes the government will require you had a chunk of that “profit” over to them. If they are honest/fair, then they’d not mess with the the CPI calculation and they’d adjust capital gains for inflation so you only be taxed on the actual increase in value, not the paper increase. But we know they are neither fair nor honest, so they don’t.
In 1965 the minimum wage was $1.25. 90% silver pre-65 quarters are now worth about 37x face value, so those five quarters they would have paid you for minimum wage are now worth about $46.25… and yet we are supposed to be far more productive now that we were then…. We’ve been getting screwed by our government for a long time.
Mike appears to have the economics well in hand and brings up the pertinent historical lessons. Which tends to reinforce what Joe observed. People are buying gold in order to “retain” value. I’ll continue to invest moderately in shelf stable foods, high quality firearms, training, and lead, copper and brass
Good call!
In the Russian/Afgan war. One 308 round was $3.50 US. As reported by Guns & Ammo magazine at the time.
And if nothing else. One can eat good and shoot throughout one’s golden years!
Good comments all!
The nice thing about a gold chart is all one has to do is invert it to show what your dollar’s purchasing power is doing.
As Bracken showed. In 1963 minimum wage was a $1.25 an hour. But that was 5-90% silver quarters. Which today is worth about $40.00 dollars.
The trick was to steal purchasing power.
And push women into the workplace as labor competition forcing wages down. Without importing new consumers.
And It worked beyond wonderfully for the elitists.
To me the big sleeper here is platinum. Throughout the 60’s and 70’s gold was 15% BELOW the price of platinum. And always had been.
Supply and demand being what it is. Could it be that gold is pushing so much higher because it is more desired, in demand and recognized as an inflation hedge? Even though not as rare.
Platinum was always considered the banker’s metal. The super-rich man’s game.
But today the price is under $1650.00 US. per ounce. And you could probably still get actual delivery on it in a reasonable time frame.
Of note might be that this inversion of gold/platinum pricing inversion started with the BRICS 20+ years ago. As their charter is the ability to settle all transactions in gold and silver on demand.
And with London controlling pricing, it would make sense to blow gold and silver into a bubble. After one had held one’s own price down through long term contracts with the producers.
Which used to run 10 year terms. And gold was held to around $300.00 US for what, 40 years?
Platinum might prove to be a better hedge at this point. (because it lacks the hype) But only to someone that knows what they’re looking at.
In a street market situation, someone is going to think it’s silver and that you’re trying to pull a fast one on them.
Gold, silver or some other tangible easily recognized yet impossible to “create” product will always be superior to the fiction of “fiat currency”. And historically every time any government or society has moved away from a tangible store of wealth it has NOT gone well for them almost always resulting in a collapse of some type.
Dutch tulip bulbs, British railroad sticks, Beanie babies, NFTs, Cryptocurrencies(TBD), Fiat currencies. At least with Tulip Bulbs and Beanie Babies you ended up holding an actual asset after the crash… With all of the above they pretty much ended up with a worth commensurate with their their hard asset value. That said, if there is a crazy spike in the ammo market (like past primer and hi-cap-mag bubbles) at least I’ll end up with something I’d want regardless of the boom-bust cycle.