Loading ...Gold Owners are the Barometers (added Japan)
Why was there no gold backwardation in the 80’s?
Why was Volcker able to get 18% rates out there to keep inflation in check? According to Volcker, debt to gdp was very manageable back then (~30%), which permitted him to (he mentioned it would be impossible to do so now).
Gold owners accepted that, and it built trust in fiat currency. They did NOT remove their bid’s for paper fiat, hence no backwardation.
Now forward to 2009.. more debt.. less gdp.. ratio exploding above 60%. Trust diminishing… hence more events of backwardation.
Lack of trust peaked in 2011… as debt to gdp started to stabilize. With 2015 was the lowest it went, then rocketed a few points higher… which also signaled the low for gold.
Now, where do you think we are heading? We are at 106%!!!
THIS IS GONNA GO BALLISTIC!!!! The gold barometer might just explode.
Note: debt to gdp data ends 2019-10-01, quarterly updated. Next 2 updates gonna be nasty.
Edit: This podcast woke me up on this idea of debt to gdp…
Edit: adding Japan.. world leader in debt to gdp…
(Something is wrong. Gold expressed in yen actually broke out strong when ratio was in excess of 160%! Yikes.)
With exponentially increasing debt and collapsing GDP it doesn’t need Einstein to work out where this is going…
Usa creeping up… nice company. Japan is where we are heading… https://goldtadise.com/?attachment_id=461218
Very nice chart Patrick.
I just dont see this going down… until sovereign debt default… collapsing the ratio… and price of gold with it.
Thinking of it… money (currency) is debt… only natural the value it stores is actual production (gdp) … so in hindsight.. explains so well why that ratio follows gold.. and even more its yearly rate of change.
The govt deficits set to go higher.. furthur increasing this ratio… diluting the store of value (gdp). Gold chart should by that same action follow and go up.