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Ultimate Money

And awfully useful when empires collapse...
 
NO ONE has asked us, says Bill Bonner in his Diary of a Rogue Economist.
 
But we keep giving our reply anyway.
 
"Are we in a new bull market in gold" was the question. Our answer: We don't know.
 
But our reply suggested it didn't make any difference. Gold has survived hundreds of paper currencies and hundreds of empires. Although the Dollar may have gained ground last year, gold will survive it, too.
 
Colleague Braden Copeland thinks gold stocks may have entered an explosive bull market. He notes that not only are prices rising, more important, so is trading volume.
 
"There's no fever like gold fever," says old-timer Richard Russell. And when gold fever takes hold...the results can be spectacular."
 
But here at the Diary we are not speculators. We are observers. And what we observe is that gold is real money...ultimate money...the kind of money people turn to when the other kinds seem unreliable.
 
It is also what great empires tend to accumulate. Like trophy wives, gold goes to winners.
  • In the 16th century, Spain collected the world's gold;
  • In the 17th century, the Netherlands was where the gold coins rolled;
  • In the 18th century, France was the world's richest nation;
  • In the 19th century, Britain brought home the world's gold;
  • And in the 20th century, the US was number one – with the largest gold hoard on the planet.
So, who are the biggest buyers of gold today? The Chinese. They are preparing to take their place on the world's largest stage.
 
Recently, we were asked to update our book Empire of Debt, written with Addison Wiggin. Most observers, we pointed out, have concentrated their attention on the growing pile of US public debt, scheduled to reach 200% of GDP by 2020.
 
We preferred to focus on the empire itself. Debt has its lifecycle. So do empires. Both expand. Then both...without exception...contract.
 
An empire funded by debt is an especially ungainly, grotesque thing. It lurches from one disaster to another – going deeper and deeper into debt each time.
 
The Vietnam War pushed President Nixon – in what became known as the "Nixon Shock" – to end the Dollar's convertibility to gold. Recent wars in Iraq and Afghanistan have further weakened the empire's finances...with costs approaching $5 trillion.
 
But it is not the debt that kills empires. Debt is just a razor conveniently left on the side of the tub.
 
In the meantime, Mr.Market can do whatever he pleases. And it may please him to push the price of gold stocks considerably higher.
 
We will see...

New York Times best-selling finance author Bill Bonner founded The Agora, a worldwide community for private researchers and publishers, in 1979. Financial analysts within the group exposed and predicted some of the world's biggest shifts since, starting with the fall of the Soviet Union back in the late 1980s, to the collapse of the Dot Com (2000) and then mortgage finance (2008) bubbles, and the election of President Trump (2016). Sharing his personal thoughts and opinions each day from 1999 in the globally successful Daily Reckoning and then his Diary of a Rogue Economist, Bonner now makes his views and ideas available alongside analysis from a small hand-picked team of specialists through Bonner Private Research.

See full archive of Bill Bonner articles

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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