A hedge against the printing press!
We borrow the following chart from a Money Management article by Russel Chesler titled ‘The Gold Factor‘. The link to the article is here.
The article begins –
‘With the world mired in debt and economic despair, the price of gold precious metal has rallied to nine-year highs and could soon surpass its all-time high as systemic financial risk grows with every dollar spent by governments trying to stimulate economies.‘Russel Chesler – Head of Investments at VanEck
And here at Goldsmith Money, we are seeing the world the exact same way.
Previously we have discussed Good Money and the Dollar. We concluded that dollars are not good money, because they could be printed at the will of Central Banks and Governments.
The following chart from abovenoted article is an example of this exact behaviour.
In the past 4-5 months the US Federal Reserve (FED) has printed 3 trillion dollars and flushed it into financial markets. This is $3,000,000,000,000.00!
Since 2002 the amount of currency digitally printed onto the FED balance sheet has risen from $1 trillion to $7 trillion. A 700% increase in the circulating currency supply (stemming from the FED), over a mere 18 year time frame.
Worse still – this is just one nation’s Central Bank. Consider that there are many other central banks around the world dong the exact same thing.
Worried? Well you should be!
All this new currency are new claims on the limited land, resources, products and services around the world. Effectively diluting the current claim of every person who has been saving dollars (or any other paper currency), for their own future economic benefit.
So how might one combat currency expansion of this magnitude? Might we suggest saving in assets which can’t be printed.
Gold – as the article suggests.
A business selling products or services with an inelastic demand. Primary production perhaps?
Cryptocurrency? With consideration to specific blockchains, their network security and adoption – perhaps?
Let us know what you think in the comments below.
Mass currency printing in various forms has been attempted the world over for 2-3 millenia – and the outcome has always been a disaster. Perhaps this time it will be different though. Perhaps?
However… we at Goldsmith Money, will not be taking any chances.
Gold chart thanks to Gold Hub and Silicon Cloud Technologies.