End of Fiat
A MUST read.. (I had to re read multiple times to grasp the meaning… still might need more to understand properly the full implications…)
Anyhow… here are some notable extracts from https://goldstandardinstitute.net/classroom/when-gold-backwardation-becomes-permanent/
“No amount of price change will bring back trust in paper currencies once the gold owners have lost confidence . Thus gold backwardation will not only recur, but at some point, it will not leave its backwardated state.”
“Backwardation should not be able to happen at all as gold is so abundant. The fact that it has happened and keeps happening means that it is inevitable that, at some point, backwardation will become permanent.”
Now look at the historical chart gold.
Backwardation starting in late 90’s… and clusters more and more apparent. See these as “kinks” in the trust physical gold owners have of the current fiat currency. The idea is… the bid for paper fiat (denominated in gold) will be removed… essentially making gold’s value expressed in fiat as INFINITE
I think I’m gonna get me some physical before it’s too late…
Edit: adding for silver… same thing .. more and more clusters…
Quote:
“In all other commodities (except silver), inventories represent a few months of production. Other commodities can even have “gluts”, which usually lead to a price collapse. As an aside, this fact makes gold good for money. The price of gold does not decline no matter how much of the stuff is produced. Production will certainly not lead to a “glut” in the gold market pulling prices downward.”
You’re right Patrick – it is a must read. Putting this alongside Plungers ‘Post Bubble Contraction’ thesis gives us a good idea where all this is going. What I’m struggling to work out is whether there is any way of containing the financial contagion before hyperinflation and currency collapse (Euro, GBP, USD and others).
There seems to be a need for a real bust before hyper inflation. By a real bust I mean back to at least 2008 highs.. maybe 2009 lows. Then the INSANE stimulus will lunch us in hyper inflation. So I think vix cools down.. gold goes up to 1775-1825… then we are caught off guard ad another round of delfation sweeps the lands… including gold.
We could make a case this has already happened… if you look at france index and some others.. they almost did full retraces.
Great charts Patrick. As members here monitor your C/B charts time to me tenters will be ahead of the crowd. Now when it happens no one knows. Just like I knew crash is coming but it happen suddenly so fast: Lock limit down.
Never be short gold future in this space. I have been there. Yes since 2008 I have read multiple time to grasp.
Great post!!!
I’m also wondering if gold is too abondant…
Every ounce of gold ever produced is hoarded. Very tiny amount consumed.
Question there is no data in 1970’s to high of 1980 on C/B. Any explanation???
No backwardation. Just contango (I removed it on in those charts to show just backwardation). I’ll post it. Maybe google