BIG PICTURE: PAPER MONEY VS. GOLD

“A trillion is hard to truly take in and understand; $80 trillion in debt is something already so far beyond our grasp, that it might as well be $100, $200, or $300 and it would almost make no conceptual difference. A good way to correct this dissonance is just think about the fact that 1 million seconds are 8 days, 1 billion seconds are 35 years and 1 trillion seconds translate into 32’000 years – bringing us back to the stone ages.”

The past few months have been really challenging for anyone invested in gold or silver; for me personally as well. Despite serious warning signs in the economy, staggering debt levels and a multitude of significant geopolitical threats at play, the rally seemed to continue unabated. In fact, I was struggling with this paradox myself. As I kept looking at the state of the markets, I couldn’t help but wonder “what if they just keep kicking the can down the road for the next 20 years, or more?”.

Since 2011, gold and silver went into a strong correction period and overall, prices haven’t benefitted from all the trillions that have been injected in the markets since 2008. Total credit growth was approximately $80 trillion, climbing from $160 trillion to around $240 trillion in merely 10 years. The major central banks combined increased their balance sheet by buying government and institutional debt from $6 trillion to $21 trillion (FED, ECB, BOJ, PBoC), but none of it went into gold. However, even though these days we read and hear these numbers so often, it is still almost impossible for the true meaning of these sums to really sink in. A trillion is hard to truly take in and understand; $80 trillion in debt is something already so far beyond our grasp, that it might as well be $100, $200, or $300 and it would almost make no conceptual difference. A good way to correct this dissonance is just think about the fact that 1 million seconds are 8 days, 1 billion seconds are 35 years and 1 trillion seconds translate into 32’000 years – bringing us back to the stone ages.

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