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Posted on 06/12/2025 9:49:13 AM PDT by delta7
Are we approaching a peak in the price of gold?
According to several mainstream economists, we are indeed.
But, they’re DEAD wrong and today I’ll show you why.
See, their argument relies on the inflation-adjusted price of gold.
In January of 1980, the price of gold reached a local peak near $850 per ounce.
According to official U.S. inflation statistics, $850 in January of 1980 would be equivalent to $3,504 today.
In the 45 years since then, gold has increased in value by nearly 300% to $3,346. That’s getting close to the “official” inflation-adjusted 1980 price of $3,504. So are we nearing an inflation-adjusted “peak gold” price?
Nope. In today’s letter, we’ll debunk this common claim.
But first, let’s set a foundation for our argument.
Since 1980 America’s monetary base has increased from $156 billion to more than $5.7 trillion. That’s a 3,533% increase.
Additionally, in 1980 the U.S. government had about $845 billion in debt. Today it’s over $36 trillion, a whopping 4,160% higher.
Furthermore, in 1980 America’s debt-to-GDP ratio was around 35%. Today it’s 124%.
So no, we aren’t approaching a peak in the price of gold. Not even close.
Bogus Inflation Stats
Anyone who has studied the way official inflation is calculated knows it’s suspicious (at best).
As an example, the average car in America in 1980 cost about $7,200. In 2023 that number increased to $48,000, an increase of 566%.
But according to the Bureau of Labor Statistics, the official source of inflation data in the U.S., the price of a car has only increased about 100% since 1980.
Hmmm, the price has increased 566% but the BLS says it has only doubled. What explains the difference?
Welcome to the wonderful world of “hedonic adjustments”. Because car technology has improved over time, the BLS says we aren’t actually paying 566% more for our cars. It’s a better product, so they say we are effectively only paying 100% more.
Despite the fact that the price of an average car has increased 566%, because it’s a better product (on paper), the BLS cooks the books and pretends things are cheaper than they actually are.
This is the twisted world of inflation statistics. Governments always attempt to downplay inflation. To acknowledge reality would be admitting wrongdoing, and most governments will have no part of that.
Based on this, we can safely say that the official inflation-adjusted 1980 high in gold of $3,504 is also bogus. As we discussed in Silver’s 3x Upside, the true inflation-adjusted high of gold may be $13,000 or more.
An Ongoing Disaster
When gold haters try to call a top, they often act as if our country’s financial situation has stabilized.
Sure, we had a little bout of inflation, but it’s all over now and everything’s fine.
Wrong. America’s debt and deficits are soaring higher. This is despite a booming stock market and relatively low unemployment. When the next recession hits, deficits could easily double.
And disturbingly, the American consumer is close to being tapped out. When the multi-decade spending spree ends, the economy will collapse like a house of cards. Money will be printed at unprecedented levels and stimulus checks will flow like a whitewater rapid.
Over the medium term, we might even see Universal Basic Income (UBI) rolled out in America. AI is set to disrupt the white collar workforce, and there’s a good chance that eventually some sort of UBI is attempted. Of course, this would only worsen the situation. More money printing, less economic incentives. But that doesn’t mean politicians won’t try it.
Over the longer run, AI is going to do wonders for world productivity. And the market will find new ways to keep the workforce busy. But first we have to experience the disruption period, which is going to add additional chaos to an already volatile era.
So no, now is not a time to take profits in gold and silver. It’s time to load up on the dips, if you’re able. This trend is just picking up speed.
I have a rule. If an article title is written as a question, the answer is always no.
Have some gold... a crap-ton of Silver. And just enough cash to cover needs.
Gold isn’t doing anything. Worthless fiat currency is.
The price of Palladium has gone crazy over the last ~30 years.
All fiat currency will continue to fall in value due to inflation caused by government debasement of the currency. Governments cannot continue spending or even pay interest on their debts by any other means but debasing currency.
The catch is that you must have physical possession of the gold, with all of the risk and costs that entails. Receipts for precious metals stored in a broker warehouse will be dishonored time and time again.
The other catch is that if things go full breakdown, the economy will revert to simple barter. You will trade that ounce of gold for a chicken unless you have something more useful in stock. Maybe ammunition will become the new currency. I would hedge with stocks of 9mm and .22 caliber
An insightful observation...
Actually it'd be smarter to keep the ounce of gold and give a couple of pre-1964 dimes in exchange for the chicken.
PeKING, OR worming u?
I say - Both.
Long term I agree gold will keep appreciating. But I have been waiting for a pullback that has never materialized.
Trading dimes for a chicken will only earn you some lead and your buckets of silver will disappear as quick as if it were a brick of gold.
Aspirin, .22s, toilet paper, and things like canned beef (not the generic Walmart hide scrapings) might be a lot safer and easier to make change for.
Physical silver and gold are only to give yourself a place in the new economy once its stabilized.
Looks like you’ve got it all figured out. So do I. We just figure different
If YOU would like to be on a Gold & Silver PING LIST, please pm me.
The Gold & Silver Ping List covers the following:
Everything Gold & Silver
Stock market investments in mining companies,
etc.
Here are my precious metals keys:
1) Buy as you can comfortably afford (fractional gold or silver) and don’t financially overreach to hoard.
2) Own it. Don’t buy, or rely, on paper.
3) Gold and silver are long-term assets. They are not stocks to be traded. Stop stressing about incremental price movements.
4) If the big boys, such as the world’s central banks, are hoarding gold there is probably a reason for that.
5) If someone tells you to buy gold, then why are they selling it?
Same reason real estate investors tell people to buy more property. when the market moves all boats are lifted. Not rocket science.
Correct. There are always buyers and sellers... of everything. Gold is one asset among many. One of the points of my post was to not hoard or become a gold bug. Rationally accumulate financial assets, among them, gold and silver.
They are selling AND buying.
They buy at a lower price than they sell.
Hence, a profit.
The more they can churn, the more profit they make.
They would love to buy AND sell in huge quantities
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