Gold rallies on weaker dollar, yesterday’s negative GDP number
Crescat sees ‘probable step-function devaluation of fiat currency systems’ against gold
(USAGOLD – 4/29/2022) – Gold rallied this morning on firmer Asian currencies and a somewhat delayed response to yesterday’s negative GDP print. It is up $21 at $1918. Silver is up 22¢ at $23.45. Gold looks like it will finish April down about 1%. Always more volatile, silver is setting up to finish the month down 6%. The World Gold Council released its Gold Demand Trends report for the first quarter yesterday, and it shows overall demand up 34% over last year’s first quarter, with soaring investment demand (up 203%) leading the way. That uptick, in turn, was led by increased ETF demand as funds and institutions returned to the market. In a recent detailed analysis posted at Seeking Alpha, Crescat Capital suggests that we are entering a new era for the global monetary system but that it might not be what is popularly envisioned.
“Contrary to much gold conspiracy thought, it does not mean that we are facing the demise of the Western banking system nor the rise of authoritarian economies and their fiat currencies. It doesn’t necessarily mean the rise of non-government backed intangible currencies either. Governments will maintain legal authority and power over currency systems. Individuals and businesses will use those currencies. The strongest fiat currencies are likely to continue to be those in advanced economies where the principles of liberty, justice, democracy, entrepreneurship, and free markets reign. The macro setup today portends a deleveraging of the global economy through inflation, including a probable step-function devaluation of all fiat currency systems relative to gold, a persistent phenomenon throughout world history.”
(Editor’s note: The accompanying chart supports Crescat’s argument. Over the past five years, gold is up 50.5% against the dollar; 44% against the Chinese yuan; 55.5% against the British pound; 55.8% against the euro; 75.7% against the Japanese yen; and 79% against the Indian rupee, with a notable acceleration in those trends since the beginning of 2022.)
Gold in major national currencies
(%, five-year)
Chart courtesy of TradingView.com • • • Click to enlarge
