Prior to 1971, the US dollar was backed by gold. Today, the dollar is backed by 2 things: the government’s ability to generate revenues (via debt or taxes), and its authority to compel economic participants to transact in dollars.
Monetary tightening has created difficulties for the US and foreign governments in managing debt. As these issues persist, gold’s role as a hedge against monetary instability and geopolitical unrest becomes increasingly important.
The drastic increase in debt defaults show that rate hikes are starting to bite. The “free money” measures during COVID-19 seem to have delayed, not solved, the problem.
Silver is often associated with “second place.” But don’t be fooled: silver is a remarkable metal that often plays a much greater role in our everyday lives than its glamorous yellow counterpart.
Assets and industries traditionally considered “safe havens” are rapidly losing their luster in our high interest rate environment. Precious metals could soon be the last bastion of safety.