I’ve seen reports of rising prices and reduced availability of all sorts of items, and the interpretation I’ve been hearing is that it’s due to inflation caused by rampant money printing.

I don’t agree with this assessment, because in order to have inflation, you would need to have printed money distributed as salaries or stimulus, to which the sellers would react by raising the prices to compensate for the dilution of the value of money. So far, I’ve actually seen inflation but it’s been contained to the very select few asset categories, because the banking system is designed to prevent people who actually need money to get it, because they are deemed “high risk”, and the entire banking system is designed around the various safeguards that essentially guarantee that all the cheap credit will be available only to the select few “blue chip” players, and they are the ones who are swimming in all this low-interest credit, supposedly created to boost the economy. What this means is that the necessary prerequisite of inflation – the increased volume and speed of circulation of money across the entire populace – does not exist. And yet, we do indeed have the opportunity to witness the increased retail prices and reduced availability of an increasing number of items. So, what’s going on?

I think what’s going on is actually worse than inflation – we’re seeing the collapse of the entire economic system, we’re seeing it contract into a black hole. The governments kept imposing various anti-capitalist rules, with all kinds of excuses – whether it’s sanctions, or fighting carbon, or fighting covid, but what they managed to do is disrupt the routine of supply and demand to the point where production became more expensive, transport became more expensive, and we now have spikes in demand that result in higher orders from the manufacturers, which raises the prices because the production just isn’t scaled for such spikes, and then those spikes clog up the transport lines, creating random and chaotic delays across the board, which then in turn creates shortages due to time delay between order and delivery, which in turn raises the retail prices. Also, there are serious labour issues due to lockdowns, among other things.

So, the entire supply-demand that usually follows predictable principles is now aggravated by the length of the global supply lines and the resulting delays, and the entire thing is magnified by the fact that all kinds of communists in power are competing with each other in introducing more anty-capitalist, anti-energy, anti-efficiency laws, and the entire machine might actually grind to a halt, to their great pleasure, and our great misfortune. Basically, capitalism normally reacts to high demand by immediately delivering high supply of goods and services, which keeps the prices either constant or lower, and now the machine is disrupted to the point where it just can’t deliver, so the obvious thing in case of reduced supply is to raise the prices. Also, the cost of staying in business in the lockdown era has increased, and the businesses can either raise the prices or close.

So, as much new money gets printed, the only places that manifest inflation are the stock market and the real estate market, because that’s where the ones with access to all that credit get to spend it, which creates huge but localized bubbles. But if we’re talking about the prices of the retail goods and services, they have nothing to do with inflation; yet, becuse the governments will eventually find a way to pour money into the pockets of consumers in order to “stimulate” consumption, and then inflation will explode in the retail market as well.

What we are seeing is a result of a socialist conspiracy to sabotage capitalism.

In one of the articles I said that young people should not concern themselves with saving money, but should instead invest in themselves – in their skills, equipment, connections and creating opportunities. However, at the same time I’ve been teaching my kids to buy gold bullion with their savings, and to save as much money as possible.

That is because there’s a big difference between a general rule and one’s specific circumstances. You see, the general advice to young people would be to educate themselves in order to acquire marketable skills in the area they have the most talent and affinity for. Also, they should equip themselves for functioning in the world, which means having a computer and a smartphone, an Internet connection, means of transportation and so on. However, what happens when someone already has all the above taken care of? If you already have all the hardware, should you keep throwing money at something that isn’t a problem? So, that’s how we get to the advice given to a specific person that contradicts the general rule.

Also, my general advice is to put the savings into precious metals, but if someone doesn’t make that much money, it might be preferable to put it all into efforts designed to make you more productive. If you’re not making enough money, saving isn’t and shouldn’t be your priority, because making more money is actually a solution to your specific problem. Saving money is great if you’re actually making money, but if you’re not, what are we even talking about?

Also, putting money into productive assets is of course preferable to putting money into precious metals; keeping money is good, but making more is essential. Also, you want to invest in stock that pays dividend and similar things that create passive income for you, unless you want to keep working until you die. However, that is a general rule. If the stock market is in a bubble, and all the stock prices are divorced from the fundamentals, investing money there is just asking for trouble. The same goes for crypto. Sure, it is profitable, if you get in early, sell below the peak and laugh all the way to the bank. However, the Ponzi schemes are also profitable if you get in early, and gambling is also profitable if you keep winning. That does not mean that gambling and investing in Ponzi schemes is a good idea in general. Some people get rich investing in weird shit, or by sheer dumb luck, or due to a freak event. Those same people usually lose it all later, when you’re not looking, and when they are no longer bragging loudly for all to hear. So, making money is better than saving, but saving is much better than losing or wasting money. Any recommendation needs to be tailored to the specific needs of the individual in question, and general advice is here only to aid one in correct thinking and planning.

As a general advice, I wouldn’t recommend people in the European Union, where VAT of over 20% is paid on purchase of silver bullion, to buy physical silver; buying fully allocated vaulted silver makes much more economic sense, and you only pay the VAT and other forms of overhead if you want it delivered into your custody. And yet, I recently bought a substantial amount of 1oz silver coins. Why? Because it is not wise to be completely exposed to remote entities where you can assert only a limited degree of control even in the best of circumstances, and in the worst case you can be cut off from your metal. The recent situation with the Perth mint, where clients were basically unable to have “their” metal delivered, and the word “default” was mentioned more than once, is a good warning – when the pressure on all sorts of financial entities increases, many weaknesses will be exposed, and what is now deemed reliable might not remain so indefinitely.

I hope you all took advantage of the low gold prices for the last few months and stacked it with both hands, because that’s not likely to repeat. 😊

There’s been lots of hype about silver lately but silver was actually holding its price better than gold in the said period, so I was primarily buying gold, because I didn’t really hope to see it at those prices anymore. I actually bought a significant amount right before it fell off a cliff, because I thought it was going up from there and had it wrong, so I’m happy to see it back at those levels; it’s not fun to be in the red. I did buy some silver, too, because it actually might respond to one of those “silver crunch” attempts and I wanted to have enough to matter.

We’re approaching Basel III deadline when the banks will be obliged to demonstrate that they have 100% physical coverage of paper gold, which would in theory end the main method of manipulation of the gold market. I’ll believe it when I see it. Also, considering how fast the money printer is going brrrrr, the precious metal prices are obviously suppressed, because everything else is growing faster than they are. This suppression can’t go on indefinitely, though, and when it pops, it will go really high. At the same time, I expect American stock market and the crypto market to go completely to shit, because it’s all speculative without any underlying value.

The banks look as if they are really struggling, and I don’t know how long they can be propped up, and at what cost. In any case, I wouldn’t keep significant amounts there.

Long version:

There’s somewhere around 200x more “paper gold” in circulation than there is actual metal in the vaults supposedly backing it up. This is politely called “rehypotecation“, and less politely it’s called “fraud”. Basically, they are selling the same gold bar 200 times and counting on the fact that almost nobody demands physical delivery. Now, the BIS apparently demands that the holders of gold as a tier 1 security under Basel III demonstrate that they actually hold physical gold in the quantities they are reporting on paper, and the deadline for that appears to be 28.6.2021. This means that some of the major players, who previously used to defraud people massively by playing with paper, are in a situation where the music will stop playing, in a game of musical chairs, so they are now dumping all that paper gold (read: fraudulent garbage that is about to be exposed) in order not to get caught, and since the market treats those forgeries as if they are physical metal, the price of both is connected, so selling off immense amounts of paper lowers the price of both. At the same time, the demand for physical metal is enormous and everything that appears on the market is immediately lapped up. When the paper positions unwind, and all the thieves manage to cover their naked butts, the price of gold, now fully physical, will likely explode to cover the same volume of money that was previously the valuation of all the “paper gold” forgeries in circulation, basically expanding to 200x or so compared to where it is today, because the “paper gold” was artificially introduced to satiate demand without allowing the price of metal to rise accordingly.

Short versions: hold and buy now while it’s cheap, and if it drops more, buy more. Think of it as Bitcoin at $300, a few years ago.