Episode Details

The gold price printed its highest ever weekly close on Friday. 

What do new highs usually lead to? Yup. More new highs. 

Is it too late to buy gold? Nope. 

Should you own some? Yup. Everyone should own some gold. 

Put 5% of your net worth into gold and hope it doesn’t go up. That’s the old Wall Street adage that I am forever quoting, and I quote it again today.

Here are my thoughts on gold and the latest developments in the Great Unravelling of Fiat. 

The de-dollarisation trend continues

For the record, gold’s all-time high was $2,089. That came in August 2020, amidst the Covid money-printing bonanza. Get past that level and there really will be a lot of noise.

I have, as long time readers - or should I say sufferers? - will know, been wittering on about de-dollarisation since more or less the dawn of time. But the de-dollarisation narrative really seems to have taken hold these past few weeks and hit the mainstream.

Just yesterday I read that French President, Emmanuel Macron, while in China at the weekend, said to President Xi. “I want to take the opportunity to insist on one point: we should not depend on the extraterritoriality of the US dollar.”

We can quibble over whether extraterritoriality is even a word, but the gist of his statement is pretty clear and it comes on the back of deals China has made in recent weeks with Russia, Brazil and Saudi Arabia to bypass the dollar and trade using the Chinese yuan.

At the “Russian Davos” – the St. Petersburg International Economic Forum – in New Delhi a fortnight ago, Russia’s State Duma Dep Chairman Alexander Babakov stated that a BRICS alliance was working on a new currency secured by gold and other commodities, including rare-earth elements.

Tucker Carlson of Fox News delivered an impassioned monologue on the subject last week, and it went viral garnering millions of views. “If you want the rest of the world to trust your currency, the last thing you would do is use it as a weapon or print too much of it”, he said. 

“But if Mitch McConnell and Joe Biden and the rest of these reckless leaders have their way, an increasing number of countries will do what so many have already done, which is begin to reject the U.S. dollar and what will happen then? 

“Well, all those dollars will come home and the value of our currency will plummet even further, and that will lead to poverty across the United States, and that will lead to the typical political and cultural volatility that inevitably follows economic collapse, disaster, and we've seen it before”.

It’s classic goldbug erotica. He even cited the fact that nobody knows how much gold is in Fort Knox because it has not been audited for generations.  

Even Elon Musk has been tweeting about de-dollarisation, exporting inflation and the likelihood of bank runs accelerating. 

I must say, I get a little bit concerned as narratives mature. The more widespread and well-formed the story, the more likely it is about to run out of steam. 

That said, the trend is strong and it’s up. 

Gold miners are too cheap

Another concern I have about this move is that woeful relative performance of the gold miners. In a trusty bull market, you want to see the miners leading the gold price higher. They are doing no such thing. The juniors (as measured by benchmark ETF, GDXJ) are a good 35% off their 2020 highs, and a quite astounding 70% off their 2011 highs at the