Postcards: Why I Just Bought More Gold...

They're just debasing the currency... and monetary inflation is rising with liquidity. ͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­ Forwarded this email? [Subscribe here]() for more You are a free subscriber to Postcards from the Florida Republic. To upgrade to paid and receive the daily Republic Risk Letter, [subscribe here](. --------------------------------------------------------------- [Postcards: Why I Just Bought More Gold...]( They're just debasing the currency... and monetary inflation is rising with liquidity. [Garrett {NAME}](floridarepublic) Oct 2 floridarepublic   [READ IN APP](   Market Update: A greater focus on the Middle East has many investors struggling to commit to the ongoing breakout we’ve witnessed out of China. Liquidity continues to rise, and copper remains in breakout territory—as we projected. Beware of chasing oil prices higher with concerns about the global economy on display and OPEC’s effective decision to abandon a three-figure price target. The energy sector is still under stress, and it will take some time to figure out. Blame EVs for the impact on the marginal (last) barrel. You’d need a vast supply disruption to get oil back to $85. One last note: [Please join FinPub to access Postcards at lunchtime.]( --------------------------------------------------------------- Dear Fellow Expat: [In 2012, Peter Schiff of Euro Pacific Capital predicted that gold prices would break toward… $5,000](. At the time, Schiff argued that a reckless Fed would be responsible for the outright surge in global gold prices. It didn't happen.  Gold collapsed from the 2011 price highs after the U.S. government raised the debt ceiling, and the Fed continued its unprecedented QE program.  He’d eventually be half-correct (with gold recently topping $2,500), but the Dow Jones was a much better hedge against monetary inflation over the last decade. [Gold v Dow Jones - Macrotrends]( Still… 12 years later, with gold breaking out this year, Schiff’s taking a victory lap. “Gold is up almost 30% so far this year. Another all-time record high today, getting close to 2700 in the spot market. This is the best year that gold has had since 1979...” he said this week. “...A key difference between now and 1979? That was the end of the gold bull market. And in 1980, Paul Volcker raised interest rates up to 20%.” From a macro perspective, it takes time for BIG, bold predictions like this to play out. There is something radically different between today's conditions and when he was trying to be first over the wall on aggressive gold predictions. When you see—in real-time, as we have in 2024 —a commitment to currency debasement (radically different from the Obama and Trump years)—as we have over the last three years, you can and should be convinced of gold’s future. It now appears the Federal Reserve is following the Bank of England's example and giving up on inflation while trying to keep the economy afloat. We’re “inflating” away our debt… all while taking on trillions in new debt at elevated prices. We’re also experiencing radical monetization and outright manipulation of the 10-year bond, or the world’s Risk-free rate. That’s spurred a lot of interest in gold… and for all the right reasons… Bill Bonner talked about “[Inflation Forever]( today. My usual LinkedIn influencers are reminding people that gold won’t stop roaring. I’m advocating that we protect my purchasing power—something I did aggressively in the Hedge of Tomorrow report in March when gold was only $2,150. Gold has a solid relationship between the money supply and its price. What’s different about today is the radical shift in where credit originates. The Fed has kept rates HIGHER and also tapered its balance sheet. I’ve heard over and over again that monetary policy was tight and that the “money supply” or the M2 is falling. But that’s where modern economists are lost. The M2 hasn’t mattered since July 1993. That month, then-Fed chair Alan Greenspan told Congress about the instability in the velocity of M2—the rate at which money circulates in the economy. He explained that it was useless in setting monetary policy. He noted that financial innovation, deregulation, and banking system changes contributed to the decoupling of M2 from the broader economy. What else was decoupling? How about the shadow banking system, which helped fuel the Long-Term Capital Management Crisis in 1997… and has been the overwhelming source of monetary organization in the last two years, adding trillions of liquidity globally since October 2022? But now that the Fed cuts rates, the U.S. money supply will likely start creeping higher again.  All while monetary inflation continues globally. So…I’m buying gold… again… at $2,650. It’s not just because of shadow banks and the Fed. I’m losing faith in the purchasing power of the U.S. dollar more than ever before. They can tell me that the CPI is just 3%. But I know… [just looking at the Chapwood Index]( that inflation is much higher than the official tally.  With more debasement likely in China… and a commitment to debt expansion across the West, I’m happy to take on more of the shiny stuff for my own peace of mind. Of course, there’s much more to my argument… And that all centers on the concept of money itself. What Is Money? Traditionally, money is defined as something that serves three main purposes: - Medium of Exchange: It can be used to facilitate transactions. - Store of Value: It preserves its value over time. - Unit of Account: It provides a standard measure of value. Gold historically met all these criteria, especially before the 20th century when many countries used the gold standard. Under the gold standard, paper currency was directly linked to a specific amount of gold, making gold "real money" by that definition. Today, most economies use fiat money—currencies that are not backed by physical commodities but rather by government decree. Here’s the problem. I don’t have much faith left in the people managing the decree. Today, gold is no longer used as a medium of exchange or a unit of account, but it remains a store of value. But its value as a global exchange—in the event of real problems—is best illustrated by one of the most eye-opening monetary presentations in currency history. Remember the Winklevoss Brothers? The Harvard graduates whose “Harvard Connection” idea was ripped off by Mark Zuckerberg… then converted into The Facebook. Well, they did okay in the end. In addition to receiving a big check from Facebook, they formed Gemini and became evangelicals in cryptocurrency. While I don’t trust Bitcoin as a long-term asset (largely because your Bitcoin is worthless with no electricity or cell phone connections… and I know the government would love to shut it down), gold and silver have a special place. And it is because of the Winklevoss brothers. Ten years ago this November, the brothers gave a speech at the Money20/20 conference titled “Money is Broken; Its Future is Not.” What was interesting about the presentation was their core argument. Money… is a technology… critical to facilitating transactions. Their argument on what could be money - long before the fiat system evolved - was limited to a middle-school understanding of science. They broke out the Periodic Table of Elements… and said… “These are your options for money” in a world where finite materials could serve as tools for transactions and ways to store your wealth. Of course, 11 elements were gas - so Hydrogen, Helium, and others were out. [Cameron Winklevoss & Tyler Winklevoss (Principals, Winklevoss Capital)]( Another large amount was corrosive and could poison a human: Lithium is the third element on the table. That’s not something you want sitting around. [Cameron Winklevoss & Tyler Winklevoss (Principals, Winklevoss Capital)]( Another big collection of elements was radioactive. So, you had to eliminate those. [Cameron Winklevoss & Tyler Winklevoss (Principals, Winklevoss Capital)]( And then there is the final issue: What is readily available? There aren’t many common elements, solid metals that are neither corrosive nor radioactive. There are only… five. [Cameron Winklevoss & Tyler Winklevoss (Principals, Winklevoss Capital)]( Platinum, Palladium, Rhodium, Silver… and Gold. Of course, Rhodium and Palladium have only been part of the table for about 140 years (since their discovery)… Platinum, meanwhile, is really hard to turn into coins, given the melting point at 3,215°F. Gold and silver were the only two things left… The best of the worst... But they became logical forms of storage and exchange. That is a pretty good deduction on the part of the Winklevi… Buying More Gold Gold won’t do me much good in a revolution. Bullets and green beans are the go-to purchases when facing a reckoning. But gold would do much better than paper money, which is already leveraged to the tilt due to the nature of the Fed’s Fractional Reserve System (there’s not as much money in circulation as money counted in banking accounts). This is one reason why the Fed flooded the financial markets in 2020, preventing bank runs. If we’re going to overhaul our monetary system at any point, my bet would be on the 5,000 years of history. And… because it has held purchasing power. I’m again repositioning my portfolio on gold and rebalancing toward the portfolio I’ve discussed in the past: betting on more monetary inflation. I’ve made two large purchases of gold and silver in my lifetime. The first was in 2014, after the crash in the wake of the Debt Ceiling Crisis, around $1,300. The second was in late 2022, when it hit $1,650. I’m buying into strength again. And I wouldn’t regret any pullback right now. I’m just increasing my allocation level… adding to my position. I don’t think gold is in a bubble. This year’s rally is just the natural course and continued bastardization of fiat currency and the stumbling toward a SERIOUS monetary crisis that starts in the early 2030s when Medicare is completely insolvent. I don’t see good things on the horizon - and more monetary inflation is coming. No one is coming to save us. And Washington treats us as expendables… little more than votes at best… and “meat with eyes” at worst… So… we do what we always do. Focus on ourselves. [I’ve given you the survival guide against monetary inflation… for free.]( Recall Michael Howell has projected a doubling of the global liquidity base every decade or so, which would take us from about $175 trillion today to $350 trillion in the mid-2030s. It’s inevitable. Your fiat currency’s value will continue to erode… and they will keep printing to stop a revolution. Do not cling to a broken currency like many generations in nations like Germany, Venezuela, or Argentina. There is NOTHING patriotic about holding onto something that erodes in value. Remember: The Fed’s system is based on perpetual bailouts. I’ve been writing about and studying this for a long time, and it appears that people are FINALLY waking up to it. I think gold will head much higher, especially with central banks loading up on more of it. This is big news for producing nations that have the opportunity to take advantage of these higher prices, even hoarding it if they desire. My Preferred Gold Investment So, how do I buy gold? I actually prefer physical gold ounces.  In a real Mad Ma-style crisis, I have something of last resort to throw at the Zombies. I just prefer knowing that the physical asset is something I can see and touch - even if it’s a mile away in a safe deposit box… or squirreled away in a treasure map (kidding). If you don’t want to buy physical gold, I advocate for the Sprott Physical Gold Trust (NYSEARCA: PHYS.) PHYS is a closed-end fund that invests and holds physical gold bullion. It’s managed by Sprott Asset Management, an incredible company focusing on precious metals and alternative investments. The trust holds physical gold bullion in secure, fully allocated storage. This means the gold is not a paper claim or derivative but actual gold bars stored in a vault. Finally, before you ask, I don’t like investing in junior miners or anything whose shares can be diluted or whose balance sheet is overrun with debt. With gold, I don’t want to invest in anything that isn’t directly tied to the commodity itself, including “good” management. This is one of the few exceptions in which I don’t emphasize operations and the balance sheet much. I want DIRECT investment in gold and silver as commodities… Nothing more. Stay positive, Garrett {NAME} Secretary of Finance Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. Under company rules, editors and writers cannot recommend their positions. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.   [Like]( [Comment]( [Restack](   © 2024 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()