Pondering on the dollar price of Gold, I am reminded of Dr. Keith Weiner’s adage that a perverse incentive will produce a perverse outcome. As all regulations are written for political, not economic reasons, that means that all regulations achieve perverse results.
Nowhere is this more apparent than in the area of money.
Because we are forced by legal tender and taxation laws to use fiat money, so all debt contracts must be written in fiat. Thus as the debt situation spirals ever-further out of control, so the demand for fiat must rise.
At the very time where awareness of the fragility of the debt-based system of money is rising, so along with that rise goes the demand, and thus the price, of the dollar.
As all fiats are a derivative of the US$, so all fiats must rise – apart from the loony socialist-managed fiats such as the Venezuelan Bolivar. These are in a class of their own.
What does this mean for the dollar price of Gold? It must mean that more and more of the Gold currently being carefully hoarded will be dumped on the market at some point as its present custodians are forced to raise the fiat necessary to delay the day when their debts overwhelm them.
That means that their Gold will eventually be used to purchase dollars – i.e. the dollar will rise to oblivion as the dollar price of Gold is trashed.
It is imperative, if at all possible, to get out of debt.
At some point, your debt will eat your Gold.
Disclaimer: this should not be taken to mean that the dollar price of gold is about to imminently fall. As someone once said: “inevitable does not necessarily mean imminent.”