The “fear of uncertainty”, which pushes demand for gold higher as it has done so many times in the past, is different this time…
Editor’s Note –
The article below stands on its own as a great article, however, this is Part II of a two part article from Claudio. Link to Part I found here (which was published on August 13th).
While the economic forces that drive this rush to precious metals are clearly understandable, there are other, deeper and less obvious factors that must also be taken into account. This “fear of uncertainty”, which pushes demand for gold higher as it has done so many times in the past, is different this time. It goes well beyond mere economic uncertainty and it involves concerns much more serious than just inflation expectations, productivity metrics and unemployment levels.
It all goes back to the aforementioned “crossing of the Rubicon” by governments and their shocking and aggressive foray into their citizens’ private lives and their household finances. The realization that the state has the power and willingness to prohibit you from engaging in gainful employment to support yourself and your family, that it can close your business and forbid voluntary transactions with other people, served as a rude awaking for millions of citizens, especially those in developed and “free” nations, who thought they understood the limits of their governments’ powers. The logical next step for them was to extrapolate from these developments and to reason that, if the state can go that far, what’s to stop them from going even further?
In other words, if they can freeze the economic system at will, overtly manipulate the financial system and hijack the banking system in order to transmit their “relief” policies, what rules are there left to break and what shall stand in the way of even more aggressive overreach? After all, it’s not like we haven’t even greater abuses before in many “civilized”, Western democracies. Extreme times have been used as excuses to justify all kinds of extreme policies, from capital controls to outright confiscations. And what is this current situation, if not extreme?
The only difference this time around is that, unlike past, “conventional” crises, the scale and the nature of the governments’ interventions were far too great and too egregious for the wider public to miss. Normal, “run of the mill”, quantitative easing operations, liquidity injections and currency manipulations can be hard to grasp, let alone worry about, for the average citizen. Sure, these policy decisions are being reported, but they’re rarely properly covered and really explained by mainstream news outlets, leaving most news consumers either confused about their true meaning and real-life implications or simply indifferent.
It’s all so vague, it can seem so far removed from our daily reality, that for most people, it’s easier to just blindly trust that central bankers know what they’re doing and go about their business. Losing your income or your business, however, because the government deemed you “non-essential”, is another thing altogether. There’s nothing to be confused about now and there’s certainly no way you can ignore this and go about your business, if you don’t have one anymore. This direct impact really drives the point home, in a visceral way, that “blind trust” probably wasn’t the best of strategies after all.
Turning to gold as a safe haven is thus the logical next step. And if anything, it really is just the first step. Once one wakes up to the fact that political “saviors” and all their promises and “solutions” are guaranteed to make a bad situation worse, the search for a way forward is eventually turned inward. Personal responsibility, independence, sound planning and timely preparation are more essential than ever.
Physical precious metals offer a reliable way to put these principles into practice. Holding part of your wealth in physical gold and silver, in a safe and predictable jurisdiction and outside the banking system lays down the tracks for an independent, secure financial future and doing so in a compliant way offers a solid insurance against legislative aggression and regulatory overreach. It also provides a rough blueprint that can be used when planning other aspects of your life, business and financial activity. This idea of choosing to “opt-out” and of asserting your right to be left alone is a powerful one and it’s becoming more attractive by the day, as the economic, political and social conditions continue to deteriorate in most western countries.
All the necessary tools, resources and systems required to facilitate such a shift toward decentralization and individual freedom already exist. On top of precious metals, that have always served as superior saving vehicle, there are also new technologies that can digitize and tokenize them, thereby making them easier to use in daily life. There are also myriads of private, decentralized currencies to serve all kinds of needs, all types of payments and transactions. The rate of progress and innovation in this space is not only remarkable in and of itself, but it also stands out for its potential to put the final nail on the coffin of fiat money.
What is arguably even more important, however, is the fact that is there is also a vast and rapidly growing number of like-minded people, who share these values of the Enlightenment, of western civilization and who wish to protect and preserve them. There are many ordinary citizens who still recognize the value of hard work, the importance of long-term thinking, and the fundamental role of liberties like free speech, free trade and voluntary exchange.
This is the main reason why I refuse to submit to all the doom and gloom scenarios and to resign myself to a hopeless and sinister future. If history teaches us anything, is that human beings are a resilient bunch and through individual ingenuity, voluntary cooperation and perseverance, we’re known to overcome adversity, even when the odds are stacked against us.
Claudio Grass, Hünenberg See, Switzerland