Jeff Clark, Senior Precious Metals Analyst
JUL 14, 2020
With gold up 20% year-to-date and silver breaking through the $19 barrier for the first time in almost a year, it’s time to consider what a gold and silver mania might look like. If Mike Maloney is right about what’s ahead, we’ll soon be part of a life-changing shift. Have you thought about how the wealth transfer might play out? Not like this you haven’t…
You grab a calculator for the third time that day, multiplying your gold and silver ounces by the price of each… the total staggers you all over again, even though you checked it just a few hours ago. Precious metals prices have been screaming higher for weeks now, jumping 5% to 10% every day, frequently higher. One day last week gold was up 20% and silver a whopping 36%, just like in 1979.
Meanwhile, the Dow and S&P have crashed. Real estate has frozen up. The bond market is a bloodbath. But gold and silver prices are soaring. Welcome to the wealth transfer.
The world is in a panic—the US dollar has crashed and the resulting inflation has spiraled out of control. Everyone around you is desperate to get their hands on any gold or silver they can. It’s morphed from greed to fear to survival. Investors scramble to buy bullion while it’s available, premiums be damned.
Prices march higher every hour. There’s no let up. Daily gains of 5% are viewed as small, but they make up for it the next day. Your portfolio swells bigger virtually every trading hour. Your life is changing right in front of you at breakneck speed.
You turn on the TV and every program is talking about the latest calamity in the markets or economy. Gold and silver updates, the only bright spot, are interjected every 10 minutes, more often than the OJ trial at its height. Breaking news is schizophrenic; it jumps back and forth between crisis updates and soaring prices in the precious metals markets. Breathless reporters strain to be heard above the noise on the trading floor, yelling about computers that can’t keep up and traders getting margin-called or becoming overnight millionaires. You’re glued to the screen and continually try to calculate your gains on the day—you can't help it.
People are obsessing about precious metals. A colleague at work knows you own gold and questions you every hour… what should I buy? Where did you buy? Where do you keep it? You worry he may talk. Your gut tells you he already has.
Relatives that once smirked at you for owning gold now call you throughout the day, interrupting your work. You kick yourself for telling them you own precious metals, and worry about them spreading rumors about you, innocent or not. The attention makes you nervous, and you’re trying not to panic. Your hiding places at home don’t feel so secure now. You wonder for the tenth time if you should move some of it elsewhere. You wish you’d stored some in a safe vault, outside the banking system.
It was all so exciting at first. Then it became breathtaking. Now it's scary. The world is falling apart around you, but you're drowning in obscene profits. You ponder selling, but the next day your portfolio screams higher and you feel overwhelmed once again.
You hear on the news that the local bullion shop had a break-in last night. They’ve since hired round-the-clock security guards. Premiums have gone through the roof, but lines still form every day. The dealer hands out claim stubs as customers arrive every morning: your number will be called when it's your turn... the wait will be long... please have your order ready... yesterday we ran out of stock by 10am.
And it's all happening because central bankers, in a desperate reaction to deflation, overshot and created too much currency. Inflation is now officially out of control and has scourged every part of life. You mock government officials that insisted this couldn't happen and curse those economists and TV pundits that claimed there was nothing to worry about. Their lies have been exposed for what they are: empty promises that had no basis in reality.
Cash has become a hot potato, and everyone rushes to spend it before it loses more purchasing power. It seems everyone is clamoring to get something tangible, but mostly gold and silver. Hyperinflation is knocking on the door and feels inevitable.
It’s got to the point where food prices change intraday, sometimes several times. The $100 your partner left with this morning to buy dinner isn’t enough. Stores and restaurants post prices on a chalkboard and update them throughout the day, always higher. You suddenly remember you forgot to fill up your gas tank on the way to work, and realize you’ll now pay more and be stuck in a long line. Your salary this month will be woefully inadequate to pay for basic necessities. The government is trying to work out an official “inflation adjustment.” Good luck with that, you mutter.
A local radio station interrupts to report that an emergency summit of all heads of state is being held. They're “working urgently” on the problem, but you and everyone else instinctively knows their solutions will fall short. Your gut tells you they don’t have the ability to solve the problems they themselves created.
Violence has quickly escalated, and rioting has become a near daily occurrence. The President called in the national guard, but you hear reports that politicians and other government officials are given first priority, above regular citizens. A major TV network runs a special report about the spike in arrests at the Canadian border… scores of US citizens have been caught trying to sneak bullion and stock certificates out of the country.
Everyone is infuriated at politicians, regardless of affiliation. A local government office was overrun by angry taxpayers and frantic benefit recipients whose checks can’t keep up with inflation. You hear another government office was set on fire. A riot erupted in the nation’s capital last week and martial law was temporarily declared. It's becoming increasingly dangerous to travel. You worry about the safety of your kids.
As chaotic as things are, however, it's hard not to be excited. You're in the middle of the wealth transfer, what is quickly turning into one of the biggest in history. Your life will change permanently—you’re part of the new rich. You could quit work, live off your investments. Your spouse is ecstatic, and your kids are in awe of your foresight… their friends and other family members are suffering, so they see firsthand how your preparation has shielded them from the turmoil.
You're so glad you bought gold and silver before the crises. Those worries about saving a few dollars on gold and a few cents on silver are petty and meaningless now. You’re so thankful you didn’t procrastinate.
You can’t help but daydream of what you might buy, where you might go. A vacation home is suddenly an option, maybe even two, as is worldwide travel. You ponder what you might invest in next, as virtually every other investment is now dirt cheap. You decide to give money to your church or charity. You make a note to schedule an appointment with the accountant. Better update the will with the attorney, too.
You wonder if you should begin to sell. You’re glad GoldSilver connects sellers with a network of over a dozen dealers and refiners, making liquidity very high. You log on to your account, the cursor hovering over the sell button…
We can't promise the wealth transfer will be exactly like Jeff outlines, but we're convinced gold and silver will be your ticket to entry. Are you ready?
(Follow Jeff on Twitter @TheGoldAdvisor)