Originally published at: Escaping Fiat Madness and Counterparty Risk With Gold, the Only “Tier Zero” Monetary Asset – Peak Prosperity
We’ve been covering gold for 2 decades. But things really kicked into a whole new gear in 2022 after the Biden administration weaponized the dollar by seizing Russian assets, including those of wealthy private Russian citizens.
The message: “The dollar system is not a safe place to keep your wealth.”
The reaction: “OK”
But the Biden mistake was merely the spark that ignited many decades of fiscal and monetary malfeasance. While that was cooking along, things more or less worked okay as long as you ignored things like the young and the middle classes being slowly demoralized and crushed by inflation and loss of ownership.
Now the warning signs are all about us, especially in the sudden and violent upward movement of Japanese bond yields. Today’s podcast guest, David Russell, the CEO of GoldCore, thinks that this time truly is different.
Meaning, we’ve reached the end of the road of seemingly endless monetary shenanigans. The central banks are out of road. Now comes a time of truly difficult and painful decisions.
David’s role selling and storing gold while located in Dublin Ireland, provides us with a very useful non-US perspective. He notes that US retail hasn’t really caught onto the importance of buying and holding gold, silver, platinum, and palladium yet, but the rest of the world has.
Especially BIG money, which is buying gold and other precious metals in size.
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David says the thinking is they are doing this not as a trade or with a trading mentality, but to secure a set number of ounces for their families. It’s not, “How much does it cost?” but instead asks the question, “How many can I get?”
This marks a really profound shift, one that I am proud to have helped many people get to over the years myself.
David also liked my concept of gold not being a “Tier 1” asset under the Basel III banking accord, but instead should rightly be considered a “Tier Zero” asset. Meaning, gold is not at all like cash or US Treasuries (both Tier 1 assets) because it has no counterparty risk. Gold is settlement itself. So it stands one very important rung higher on the safety ladder.
It does not require that any other counterparty be on the other side of the transaction to fulfill their end of the bargain, such as needing the US Treasury to pay off bond principal amounts when they mature. Or hoping the Fed doesn’t overprint cash, thereby debasing your holdings before you make use of them.
Gold just sits there, a shiny lump in the corner, doing absolutely nothing. Which is awesome, because that means that if The Great Taking machinery gets activated, the gold is still just sitting there, doing absolutely nothing. If the banking system freezes up, and trillions get “bailed-in,” your gold still sits there quietly in the corner doing absolutely nothing. If Japan cannot raise taxes fast enough to pay off its government bonds and either prints (a soft default) or cannot repay the maturing debt on time (a hard default), gold just sits there in the corner shining brightly in even the dimmest of light.
Big money is well-advised money, and it has apparently been advised to pile into the only Tier 0 monetary asset that has quietly been performing that role for thousands of years. You know, just in case.
Timestamps
00:00 Introduction to Precious Metals and Current Market Dynamics
02:00 The Flight to Hard Assets and Fiat Currency Crisis
06:50 The Role of Silver in Modern Technology
10:00 Japan’s Economic Situation and Potential Crisis
14:45 Understanding Counterparty and Sovereign Risk
18:27 Unprecedented Demand for Physical Precious Metals
22:21 The Shift in Investment Strategy Towards Tangible Assets
25:04 Gold as a Tier Zero Asset and Its Unique Position
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