Is Gold (and Silver) Trying to Tell Us Something?

Anyone who has followed the monetary system issues discussed here on this blog understands that one of the key signals to keep an eye on is what is happening in the gold market. Sometimes what is happening in the silver market is also something to monitor as well. This blog is not focused on the gold and silver markets, since there are plenty of sites and information sources that cover those markets.

What we do try to monitor here are any signs that the existing US dollar based monetary system might be under stress or on the verge of some kind of major change, since that would surely impact all of our daily lives in a direct way. 

For years here, we have presented many risks that exist and are ongoing to the present monetary system. We have presented proposals from some of the leading experts in the world on ways to reform the monetary system with the goal of making it stronger, more resilient, and to hopefully better serve the average person this blog has tried to reach.

Recently, we have seen gold rise to historic highs in terms of its price in US dollars (and all other fiat currencies for that matter). Silver has now also showed signs of trying to confirm that perhaps something unusual is starting to unfold in the gold market. When we see this, the obvious question to raise here becomes -- Is Gold (and Silver) Trying to Tell Us Something about the stability of the present monetary system? 

We don't know the answer to that question yet, but we do believe it is time to monitor this more closely. There are several explanations offered for the recent move in gold prices. But in this article we will provide some links below to some that suggest this time could be different and we might be seeing early signs of some cracks in the present monetary system. We don't make predictions here and readers can research this and draw their own conclusions. But below are some experts who are worth listening to just in case this time is different.

This first link is more of a background to "the big picture" of why many are concerned about the soundness of the money used in our present monetary system. It's a 2022 interview with authors Brendan Brown and Robert Pringle about their book - A Guide to Good Money. Robert Pringle is a good friend and his views carry a lot of weight here having spent his entire career inside the central banking system. I view him as an expert on the present monetary system so his comments on what has gone wrong with it are valuable for anyone wanting to learn about these issues.

This next link is a recent interview with another expert and good friend - Jim Rickards. Jim believes there are several factors influencing the rise in gold including inflation and debt. In this recent interview he talks about one he feels is key, but overlooked in mainstream media. The weaponization of the US dollar now taken to new extremes with recent action in Congress (Repo Act) that authorizes the President to seize Russian assets (denominated in US dollars) that have been frozen as part of the sanctions. Jim explains why he thinks this could be a huge miscalculation by the US with potential significant ramifications on both the gold market and ultimately global acceptance of the US dollar around the world. That of course is exactly what we try to monitor here.

Next, we have Michael Oliver sort of summarizing these same issues and explaining why he thinks gold is saying this time will be different.

Then we have this recent interesting comment by Judy Shelton on her X account in reply to being asked if we will return to a gold standard in 2024. She replied "Thinking something like that, but in 2026. Stay tuned." You may recall she was nominated to be on the Federal Reserve Board by President Trump, but was not confirmed before he left office. What might prompt a reply like that is a reasonable question to ponder.

These links are enough to give you a feel for the big issues at stake here and why it seems like it may be time to monitor the gold and silver markets closely into the November elections in the US. There are many different stress points on the system out there and the coming US election is more likely to amplify them than to calm things down. 

ERA -- A Novel Approach to Achieving Sound Money?

With not much happening in terms of major monetary system change, I did hear from Dr. Joseph Potvin recently. He updated me in regards to some potential real world experimentation with his Earth Reserve Assurance Proposal (covered some time ago here). He forwarded me a copy of his December 2023 conference paper that covers the proposal in detail. A very recent version of the proposal paper can be found here.

We have archived several different proposals for monetary system reform and this one falls into a category I would describe as creative and innovative new ideas.

Below I have pasted in the abstract for the paper that explains the proposal in general and how Dr. Potvin envisions it functioning in a real world environment.

Abstract

"This paper presents a novel approach to achieving sound money. The design can be incrementally retrofitted to any conventional currency in a multi-currency system without a central reference unit of account. Drawing upon monetary theory and elements of monetary system designs of ancient Sumer and modern Hungary, a new tradable deposit receipt security would be introduced that is indexed to changes in the capacity of ecosystems within the currency zone to produce primary commodities, relative to a base year, weighted by currency of invoicing data across jurisdictions. 

This would establish a grounded 'Money-of-Account' referent for that currency. New money creation involves a second new tradable deposit receipt security to be issued by corporations and communities that have verifiably improved the primary productive capacity of ecosystems in their currency zone. 

Central banks would be invited to redeem the securities with a special series of commemorative banknotes, to serve as Money-in-Trade valued in accordance with the Money-of-Account. With this auxiliary method, relative currency worth reflects changes in the core ecological co-determinants of economic activity. Instead of expressing ecosystem productive capacity in terms of money, this framework expresses money in terms of ecosystem productive capacity."

Will Anything Change in the Monetary System in 2024?

Now that the BRICS summit has resulted in no significant changes to the monetary system so far, a reasonable question to ask is -- Will Anything Change in 2024?

We can never make future predictions with any certainty, but the odds are that not much will change in the monetary system in 2024. The US is in another Presidential election year so the focus by those in power will be to reassure the public that all is well which suggests no major monetary system reforms will be coming from inside the system. Why change things if things are going great as they will assure the public they are under their superb leadership?

On the flip side, those seeking to replace those in power will campaign on every negative thing they can think of and attempt to convince the public that only replacing the those in power now with themselves can save us from total imminent economic destruction.

In other words, the same political rhetoric we have had for decades on both sides by those in power vs. those seeking to replace them. 

Those attempting to replace those in power now will likely promise all kinds of "transformational change". If history is any guide, very little transformational change to the system will actually happen regardless of who wins the elections. It's mostly just campaign rhetoric on both sides.

The view on this blog for years now has been that only a collapse or implosion of the present (very corrupt) monetary system will open the door for any kind of major transformational changes. Those in power always have incentive for that not to happen on their watch since the "transformational change" will be quite painful for most people and result in total loss of their credibility from the general public. They would lose their positions of power and privilege. 

Those not in power tend to revert to this same mentality once they gain power (if they win) after telling everyone disaster is on the horizon if they are not put in power. Now they will own any disaster that happens, so they revert to saying everything will be great again with no real major changes actually taking place and hope the system keeps pumping out enough money (credit) to keep things afloat and most people content.

So, our expectation here is the same as it has been for a long time. Nothing major will change in the monetary system unless it collapses and change is forced upon those in charge (or those who replace those who are in charge). The trick in politics is to hope that the timing of something bad happening in the economy or with your currency is when the other guys are in power so you can blame them. No one wants to be Herbert Hoover.

We'll continue to monitor things here, but no postings here means we don't see anything major happening that would lead to major systemic changes. Most likely, if something happens that leads to major change, it will catch most everyone by surprise including us. But we'll continue to monitor events as best we can here and alert readers if we see something real and tangible that might impact the present monetary system.