UP JUMPED THE DEVIL
When I started in the precious metals business 47 years ago, I quickly embraced the viewpoint that inflation would destroy the purchasing power of the dollar. The pro-gold economists of the Austrian School warned about the dangers of fiat money and runaway government spending. I believed them. However, the crashes and crises came and went and the monetary authorities invariably printed our way through them. The big one never came. In retrospect, 2008 wasn’t the end of the world. So I became skeptical of the gloom and doom school. When some guy who got in the gold business a year ago started writing about the coming collapse, I rolled my eyes.
Now we are confronted with a crisis for the ages. The monetary Cassandras are preaching Armageddon once again and I don’t know what to believe. Newsletter editor Bob Moriarty writes, “We have entered a depression that is going to turn our world upside down. Before it ends, the general market will be down 85-92%, banks will close and governments fall.” Bullion dealer Egon von Greyerz writes, “The end of the financial system as we know it today is guaranteed. Its demise is imminent.”
These are strong words. The virus is a different kind of problem and perhaps the lack of a solution will cause financial mayhem and social unrest. Nobody can know for certain the final outcome. If I had to wager, I would bet on inflation of the double digit variety. The cost of living will likely skyrocket.
The entire world is focusing on a cure. That’s a lot of firepower. Until we know for sure where this virus will take us, everyone should hedge their bets. Gold and silver have become scarce as worldwide demand for physical metal literally explodes. Everything I’ve learned about gold and silver in the past 47 years tells me the price of these assets should lift off. I also need to say that some of the articles and quotes in this letter make a worst case scenario that scares even me. I’m not suggesting they are wrong, but they aren’t going to be right about everything.