Real Royalty And Pretend Royalty

September 25, 2020
Market Analyst, Author, and Founder of The Deviant Investor

GLOBAL ROYAL FAMILIES:

  • Royal families have ruled Great Britain for centuries. They control massive wealth and exercise considerable influence in global affairs.
  • The Dutch royal family is less visible.
  • King Donald and Queen Melania are influential, but not royals.
  • Prince William of Gates, Prince Jeffery of Amazonia, and Prince Elon of Teslovakia are new members of pretend royal families – “Tech Royalty.”
  • Queen Hillary and King William of Clintonia are pretend royalty, but we aren’t going there…
  • Other pretend royalty are Prince Barack and Princess Michelle from Obamanoya, and several Prince Georges from the Duchy of Bushington. Their days as pretend royalty are fading.

Royals come and go. We celebrate their lives, observe their departure from public life, and move on to another distraction.

The life cycles of Chairpersons of the Federal Reserve resemble royals. For a few years they are closely watched, every word is analyzed, and they are treated as royalty—because they control the flow of fiat currency units. But after they have implemented destructive monetary policies, make a mess of the global economy, loaned $trillions to Wall Street, and crushed retirees and “Main Street” businesses, they give $100,000 speeches, write books for $millions, and fade into oblivion.

But there is no point discussing the occasional successes and many failures of our political and monetary pretend royalty. Nor are we interested in American “Royalty” or the billionaires of “Tech Royalty.”

The true financial royalty—King Gold and Queen Silver—are far more important, even though they create fewer headlines in the controlled media.

  • Gold and silver have been financial royalty for millennia, unlike royal families.
  • Gold can be cast into a crown that lasts for centuries. In contrast, real and pretend royalty may persist for decades, but most come and go quickly.
  • Gold retains its beauty forever. The appeal of royalty fades, is defaced by scandals, diminished by corruption, and is quickly degraded.
  • Gold retains its value, is universally recognized, and appreciated everywhere. Central banks buy gold but seldom discuss its value. The Fed is adamant its currency is valuable, even though they create dollars by the trillions, and each dollar is backed by nothing tangible. Most of our pretend royalty are praised in the media but will fade into oblivion long before gold loses its shine.
  • Presidents come and go. Central bankers rise and fall. Pretend royalty, like comets, shine briefly, and disappear. Gold keeps its beauty and value. Silver retains its purchasing power and has thousands of industrial uses. Former Presidents and government leaders, especially corrupt ones, fade into oblivion.
  • Gold persists. Silver lasts. Dollars devalue. All fiat currencies revert to their intrinsic value—zero. The only royals that survive the test of time are gold and silver.

THOUGHT EXPERIMENT:

  • Fifty years ago, a dollar purchased 1/40th of an ounce of gold.
  • Today, a dollar purchases 1/2000th of an ounce of gold.
  • The devaluation of the dollar has accelerated since 2008. Assume it takes thirty years, not fifty, to similarly devalue. In that case a dollar in 2050 will purchase 1/100,000th of an ounce of gold.
  • That means the price of gold in 2050 would be $100,000 per ounce.
  • Crazy, right?

But the Fed created over $3 trillion of new fiat dollars (from nothing) in the last year. Was that crazy? Is a national debt of $27 trillion crazy? Are financially supported riots crazy? How can COVID-19 be spread by Trump rallies but not by BLM demonstrations and riots (per CNN)? Crazy?

BACK TO BASICS:

1)  Dollars are created with few restrictions, because of fractional reserve banking and central banking.

2)  Dollar creation will persist because it benefits the political and financial elite.

3)  Extra dollars (debts of the Fed) in circulation, as indicated by rapidly increasing debt, devalue existing dollars. Hence prices for stocks, commodities, medical care, political payoffs, gold, and silver rise.

4)  Prices can rise too far, too fast, and then crash. Remember silver in 1979-80, Japanese real estate in 1990, Internet stocks in 2000, real estate in 2007, crude oil in 2008, and FAANG stocks in 2019-2020.

5)  Prices rise as dollars are devalued, because too many dollars have been created. A dollar crisis is coming.

6)  This process gradually transfers wealth from the many to the few. That’s why the Fed and banking cartel support it.

7)  Symptoms of a dollar crisis: Near zero interest rates, interest rates set by the Fed but not the market, deficit spending, national debt rapidly increasing, useless wars that primarily benefit military contractors, medical care costs so high they create bankruptcies, income inequality, riots in the streets, and so many more.

8)  IF IT CAN’T CONTINUE FOREVER, IT WILL STOP.

9)  We don’t know when the system will collapse, so prepare with gold and silver.

NATIONAL DEBT:

  • From 1913 to 2020, national debt increased from $2.7 billion to $27,000 billion at a compound rate of 8.9% per year, every year. Debt doubled, on average, every eight years.
  • From 1971 to 2020, national debt increased from $398 billion to $27,000 billion at a compound rate of 8.6% per year. Debt for the past fifty years also doubled almost every eight years…
  • Assume similar debt nonsense continues for another 40 years.

Year                            National Debt

2020                           $27 trillion

2028                           $54 trillion

2036                           $108 trillion

2044                           $216 trillion

2052                           $432 trillion

2060                           $864 trillion

                                   Crazy!

IF IT CAN’T CONTINUE FOREVER, IT WILL STOP.

As the national debt increases, prices for gold, silver and stocks will rise. Examine these graphs of annual gold prices and national debt for the last 50 years. The graphs assume $3,000 gold in late 2022, $3,500 gold in 2023, and $4,000 gold in 2024. They assume national debt of $31 trillion in late 2022, $34 trillion in 2023, and $38 trillion in 2024.

OBSERVATIONS:

  • The charts show that gold prices track total national debt. The correlation over 50 years is about 0.92 from only one variable—debt. Impressive! Excessive debt raises prices.
  • INFLATE OR DIE!
  • There is no political will to reduce debt. Huge incentives exist to increase debt. Hence national debt will increase.
  • Gold and silver prices will also increase.
  • The debt can’t be repaid with dollars of current value. The debt must be defaulted or inflated. In either case, gold and silver will preserve purchasing power.
  • Royalty and pretend royalty will fade into oblivion. Gold will not.
  • The economic shutdown destroyed businesses and tax revenues. More dollars will be created to compensate. Think massive debts and “printing press” currency – like a “banana republic.”

Read:

Christenson       Who Was That Masked Man?

Christenson       We Tested Positive!

From David Schectman:

“Since the banks aren’t lending and Americans aren’t spending, the government will have to work overtime to force money into the economy, which also increases the already unsustainable deficits.”

“The Fed is not in charge; the banks are in charge. They’re not lending because they know what’s going to happen.”

“… neither [political] party will solve the problems, and neither is capable of steering us through the pandemic and Great Depression. You think it’s bad now? Wait until after the elections.”

From Ed Steer:

“The decline in the U.S. dollar is now unstoppable…”

CONCLUSIONS:

  • Debt will increase—doubling every eight years.
  • Gold prices will rise along with debt as devalued dollars buy less. A panic out of the dollar, hyper-inflation, and loss of reserve currency status will accelerate gold’s price rise.
  • Royals and members of pretend royal families come and go. Gold and silver remain.

Miles Franklin will convert devaluing dollars into gold and silver. Call 1-800-822-8080.

Gary Christenson

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Gary ChristensonGary Christenson is the owner and writer for the popular and contrarian investment site Deviant Investor and the author of the book, “Gold Value and Gold Prices 1971 – 2021.” He is a retired accountant and business manager with 30 years of experience studying markets, investing, and trading. He writes about investing, gold, silver, the economy and central banking.

Palladium, platinum and silver are the most common substitutes for gold that closely retain its desired properties.

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