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Massive Paper Gold and Silver Selloff Continues

The strength that the fiat financial powers collectively built is price inflation indeed.

This week the government’s underreported inflation figure came in at 8.3%, higher than expected for April but slightly lower than the 8.5% y/y figure reported the month of March prior.

Of course, one of the crucial factors running within CPI data wrangling is found in underreported housing costs that they consistently, consciously misconstrue using wild data input guesses like owner’s equivalent rent figures. 

Instead of the genuine price rise in US rent and housing prices year over year, which is closer to up +20% y/y, than the supposed +5.1% figure they use to underreport and debase nearly 1/3rd of their regularly reported data.

And we can currently see that average US consumer budgets cannot keep up with the escalating prices of goods and services, as balloting consumer debt levels are reaching new all-time high levels of late. Ramping credit card debts for US consumers is the most prominent telltale signal.

Ramping price inflation globally and financial bubbles in nearly all major financial asset classes are merely the symptoms of blowing out the world’s circulating fiat currency supply by over $20 trillion since 2020 started. Yet the US Stock market is possibly now entering a bear market that could last for many years to come.

One in five circulating fiat currency units were born in 2020-2022, coming out of thin air in that last just over a two-year timeframe.

Consumer spending, according to the Track the Recovery website, shows that US consumer spending is now persistently in the mid-teen percent higher than it was before 2020.

Keynesian economists and their inaccurate price inflation forecasts will keep proving incorrect ahead. Whatever they say, we can double or even triple their financial propaganda guesswork for greater accuracy on real price inflation ongoing.

At least a few high net worth financial commentators were out this week telling the world to get used to stagflation, otherwise known as persistently high inflation and low growth in the real economy.

The savage sell-off in silver and gold derivative markets continued this week. Both the US stock and bond market bubbles continued letting out air, and traders around the world scrambled for fiat US dollar liquidity. The precious metal prices were not spared from large selloffs either.

The daily silver price is closing this week’s trading just over $21 oz, but it briefly fell into the mid $ ’20s per ounce early today. In terms of the silver spot price, we have not seen levels this low since late July 2020.

The daily gold price briefly tiptoed below the psychological 1,800 oz level, closing the week at over $1810 oz. 

The gold-silver ratio finished this week at 86.

The last month of sell-offs for gold and silver have been historically strong. 

But on the bright side, this selloff has also been a blessing for those looking to acquire positions at lower price points.

For instance, for the last nearly 52 years, the now fiat US dollar has decoupled from gold price discipline, and the gold-silver ratio has rarely blown out to the high 80s level. Only about one in ten monthly gold-silver ratio averages have eclipsed the +80 level over the last five decades.

The current spot gold price is below its 200-day moving average, around $1,835 oz, which is usually an excellent time to acquire longer-term gold and silver positions when in a bullion bull market.

The main driver for this has been happening in the drive for liquidity and recent financial market volatility to the downside of late.

While both the US stock and bond markets have been having some of their worst performances to start a year, the fiat Federal Reserve note or fiat US dollar has been gaining relative strength versus all other fiat currencies the world over, aside from the fiat Russian ruble which continues strengthening on a comparable basis.

We’ve lived through financial market calamities before, and it’s almost always the same; massive selloffs and repositioning mean huge short-term demand for the fiat US dollar relatively versus other fiat currencies outstanding.

Using the DXY, or the often cited US dollar currency index, the USD is now near 20-year high levels relative to the fiat euro, yen, pound, Canadian dollar, Swedish krona, and Swiss franc.

Recall the original inverse pyramid, created by perhaps the last honest central bank, Federal Reserve governor John Exter in the late 1960s. A scramble for US dollars is second to last in a liquidity crisis. In the end, it becomes a scramble for gold bullion.

To further highlight the point I made last week about gold values rising globally outside our green fiat-colored glasses, we turn to longtime financial analyst Dave Rosenberg who was just interviewed on the Macro Voices podcast yesterday. Have a listen to what he said.

To close this week.

The world’s then circulating fiat currency supply back in late 2011 was around $55 trillion in fiat US dollar equivalent outstanding, nearly half of where it stands today.

Back in August 2011, the gold price then cleared $1,900 oz to a then-record nominal price high, and that was still nowhere near a bubble for relative gold values over the past five decades of financial history. 

The total world physical gold supply (170k metric tons) was valued near $10 trillion, just shy of 1/5th of the then circulating fiat currency supply outstanding. 

Today, the total world physical gold supply (203k metric tonnes) is valued at nearly $12 trillion, which is relatively cheap compared to how nearly doubled the supply of unbacked fiat currency is now sloshing around the world’s deteriorating financial markets. 

The spot gold price has to climb to nearly $3,000 oz to reach gold vs. fiat currency ratios once touched back in 2011.

We’ve nearly doubled the world’s fiat currency supply outstanding over the last decade, and the price of gold has gone relatively nowhere… yet.

As the next significant financial calamity inevitably comes about, expect the fiat economic powers to continue playing with our collective confidence in their fiat currency units, inflating record debt levels and not delivering on unfunded promise piles in real terms.

Gold stands to be the final bubble and mania as this unwinding unfolds.

We still have a long way to go.

That is all for this week’s SD Bullion market update.

As always to you others there, take great care of yourselves and those you love.

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James Anderson
James Anderson
Content Director

A bullion buyer years before the 2008 Global Financial Crisis, James Anderson is a grounded precious metals researcher, content creator, and physical investment grade bullion professional. He has authored several Gold & Silver Guides and has been featured on the History Channel, Zero Hedge, Gold-Eagle, Silver Seek, Value Walk and many more. You can pick up Jame's most recent, comprehensive 200+ Page book here at SD Bullion.

Given that repressed commodity values are now near 100-year low level valuations versus large US stocks, James remains convinced investors and savers should buy and maintain a prudent physical bullion position now, before more unfunded promises debase away in the coming decades.

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