Crazy Moves Ahead! Upcoming Gold & Silver Rally are Going to Shake the World - Alasdair Macleod

Money Sense
9 Apr 202411:16

TLDRAlistair Macleod discusses the increasing instability of the credit system and a global shift towards tangible assets like gold. He suggests that the devaluation of credit will fuel inflationary pressures, as people move away from credit-based assets. Despite official statistics, the true extent of inflation may be masked. Macleod anticipates a reevaluation of the credit system with profound implications for the financial landscape, as foreign investors prefer gold over dollars.

Takeaways

  • 📈 The value of commodities priced in gold has remained remarkably stable over a long period, while the fair currency value tends to rise, reflecting the inherent volatility and long-term upward trend.
  • 💰 People are moving away from credit to more solid assets, such as commodities and physical gold, indicating a shift in investor behavior and preferences.
  • 🌐 There is about $28-130 trillion of credit currency in circulation globally, which is influencing the gold price and investor interest in gold as a safe haven.
  • 📊 Recent data suggests a potential hard landing for the US economy, leading to a surge in interest among gold investors who see it as a haven asset.
  • 🚀 Gold prices have surged by 12.6% year-to-date without significant support from Federal Reserve policy shifts, a weaker dollar, or increased institutional investment.
  • 💹 Alistair Macleod anticipates that the shift away from credit-based assets to tangible ones will drive inflation rates higher, despite official statistics that may mask the true extent of inflation.
  • 📈 The devaluation of credit is expected to fuel inflationary pressures, as people increasingly recognize the declining value of credit and seek alternatives like physical gold.
  • 🌍 Asian hegemons are investing in and stockpiling commodities, such as copper and silver, as part of their economic strategies.
  • 🏦 The US economy is considered to be bolstered by government spending rather than resilient, with a significant portion of GDP coming from non-productive sources.
  • 📈 Rising interest rates may trigger a shift in value for the credit system, exposing malinvestments and unsustainable leveraged positions, particularly in sectors like commercial real estate and private equity.

Q & A

  • How does the value of a basket of commodities change over a long period when priced in gold?

    -The value of a basket of commodities remains remarkably stable over a long period when priced in gold.

  • What is the current trend in commodity prices and how does gold relate to this trend?

    -Commodity prices are currently rising, and gold is going with that flow, either driving it or being driven by it.

  • What is the key point Alistair Macleod makes about the shift in investor behavior?

    -Alistair Macleod argues that investors are moving away from credit-based assets towards tangible ones like physical gold due to the inherent instability of the credit system.

  • How has the recent data on the US economy influenced gold investors?

    -Recent data pointing towards a potential hard landing in the US economy has sparked a surge in interest among gold investors, who are turning to the precious metal as a haven asset.

  • What does Alistair Macleod anticipate will happen to inflation rates as a result of the shift towards tangible assets?

    -Macleod anticipates that this shift will drive inflation rates higher, as the devaluation of credit will fuel inflationary pressures.

  • How does the Federal Reserve's stance on interest rate cuts affect the gold market?

    -The gold price has surged without significant support from a pivot in Federal Reserve monetary policy, indicating that the anticipated rate cuts have not been a major factor in the recent increase in gold prices.

  • What is the significance of the increase in the gold price by 12.6% year-to-date?

    -The significant increase in the gold price, despite occurring without major policy changes or resurgence in institutional investment, suggests a strong market interest in gold as an alternative to credit-based assets.

  • What does Alistair Macleod suggest about the future of the credit system?

    -Macleod suggests that we are witnessing the early phases of a substantial reevaluation of the credit system, which will have profound implications for the broader financial landscape.

  • How does the rise in commodity prices, such as copper and silver, relate to the global economic dynamics?

    -The rise in commodity prices reflects a global shift towards investing in and stockpiling tangible assets, indicating a move away from credit and towards more solid forms of investment.

  • What concerns does Alistair Macleod raise about the US economy and its resilience?

    -Macleod raises concerns that the perceived resilience of the US economy is not genuine, as it is being propped up by government spending rather than productive economic activity.

Outlines

00:00

📈 Commodity Stability and Shift to Tangible Assets

This paragraph discusses the historical stability of commodities priced in gold over a long period, contrasting it with the volatility of fiat currency. It highlights the current trend of investors moving from credit-based assets to tangible ones like physical gold, driven by the inherent instability of the credit system. The strong performance of gold is attributed not to its increase in value, but rather to the decline in credit, with investors seeking a solid asset. The narrative also touches on the significant amount of credit currency in circulation and the impact of this shift on the global economy.

05:01

💡 Inflation Concerns and the Erosion of Credit Value

The paragraph emphasizes the growing concerns over inflation and the devaluation of credit. It points out that official government statistics may not fully capture the true extent of inflation. The discussion includes the impact of interest rate hikes by the Federal Reserve in response to inflation and the potential risks to financial stability and investment portfolios from higher interest rates. The speaker criticizes the US economy's reliance on government spending and argues that the GDP does not reflect the quality of economic transactions, suggesting that the economy is not as resilient as it appears.

10:03

🌐 Global Economic Shifts and Gold's Resilience

This paragraph focuses on the changing landscape of the global economy, marked by concerns over inflation and the stability of the credit system. It discusses the rising interest rates and their potential to expose malinvestments, particularly in sectors like commercial real estate and private equity. The speaker suggests that higher interest rates are likely to persist, leading to a preference for gold among foreign investors over holding onto dollars. The paragraph concludes by highlighting the potential impact of these shifts on traditional investment strategies and invites viewers to share their thoughts on the matter.

Mindmap

Keywords

💡Commodities

Commodities refer to basic goods that are used in commerce, such as agricultural products, minerals, and energy resources. In the context of the video, commodities are highlighted as assets that maintain their value over time when priced in gold, indicating stability. The rise in commodity prices, including gold, is discussed as a sign of people moving away from credit-based assets to tangible ones, reflecting a shift in investor behavior due to the perceived instability of the credit system.

💡Credit Currency

Credit currency is a type of money that is not backed by physical assets like gold but is instead based on the creditworthiness of the issuing entity, often a government or financial institution. In the video, there is an emphasis on the volatility of credit currency, especially when compared to gold, and the current trend of investors moving away from such currencies in favor of more stable assets like physical gold, due to concerns about the stability of the credit system.

💡Inflation

Inflation refers to the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. In the video, it is suggested that the devaluation of credit will fuel inflationary pressures, and that official government statistics, such as the Consumer Price Index (CPI), may mask the true extent of inflation. The speaker posits that the shift towards tangible assets like gold is a response to anticipated inflation.

💡Federal Reserve

The Federal Reserve, often referred to as the Fed, is the central banking system of the United States, responsible for implementing monetary policy. In the video, the Fed's anticipated rate cuts and its focus on core CPI are discussed in relation to the gold price surge and the potential for a hard landing in the US economy. The speaker suggests that the Fed's actions may not be sufficient to stabilize the credit system and that a shift towards gold is underway.

💡Safe Haven Asset

A safe haven asset is a type of investment that is expected to retain or increase in value during times of market turbulence. In the video, gold is presented as a safe haven asset that investors are turning to amidst economic uncertainties and concerns over the stability of the credit system. The rise in interest among gold investors reflects a growing appetite for such assets as a protection against potential financial instability.

💡Market Speculation

Market speculation refers to the act of buying or selling financial instruments (like stocks, bonds, or commodities) with the expectation of making a profit based on future price movements, often driven by economic events or trends. In the video, market speculation is mentioned as a factor that may influence the price of gold and other commodities, as traders analyze policymakers' stances on potential interest rate cuts.

💡Malinvestments

Malinvestments occur when resources are allocated to investments that are not sustainable or do not yield the expected returns, often due to incorrect price signals from the market. In the video, Alistair McLoud highlights the potential exposure of malinvestments, particularly within sectors like commercial real estate and private equity, as higher interest rates are likely to reveal unsustainable leveraged positions, posing risks to financial stability and investment portfolios.

💡Interest Rates

Interest rates are the percentage of a loan that a lender charges for borrowing, and they play a crucial role in the cost of borrowing and the return on investment. In the video, rising interest rates are discussed as a factor that could trigger a shift in value for the credit complex and expose malinvestments. The speaker suggests that higher interest rates are here to stay, as they compensate foreigners for the risk of holding a foreign currency, such as dollars.

💡Devaluation

Devaluation refers to the reduction in value of a currency relative to other currencies or to the value of a specified commodity, such as gold. In the video, the devaluation of credit is posited as a driver for inflationary pressures, as the loss of value in credit leads people to seek more stable assets like gold. The speaker argues that the decline in the purchasing power of credit will eventually lead to a reevaluation of the credit system.

💡Purchasing Power

Purchasing power refers to the value of a currency in terms of the amount of goods or services that can be purchased with it. In the video, the concept of purchasing power is discussed in relation to the stability of commodities priced in gold over a long period of time, as opposed to the declining purchasing power of credit. The speaker argues that the shift towards tangible assets like gold is a response to the erosion of purchasing power due to the devaluation of credit.

💡Global Economy

The global economy encompasses all economic activity on Earth, including the production, distribution, and consumption of goods and services. In the video, the global economy is discussed as being in a state of flux, with a shifting landscape marked by concerns over inflation, the stability of the credit system, and the rise in interest among gold investors. The speaker suggests that we are witnessing the early phases of a substantial reevaluation of the credit system, which will have profound implications for the broader financial landscape and the dynamics within the global economy.

Highlights

The value of a basket of commodities is remarkably stable when priced in gold over a long period of time.

Commodity prices are rising, with gold following this trend, indicating a shift from credit to more solid assets.

Alistair Macleod suggests that the inherent instability of the credit system is driving investors towards tangible assets like physical gold.

Recent data indicates a potential hard landing in the US economy, sparking a surge in interest among gold investors.

Gold prices have surged by 12.6% year-to-date without significant support from Federal Reserve policy or a weaker dollar.

Macleod anticipates that the shift from credit to tangible assets will drive inflation rates higher, despite official statistics potentially masking the true extent of inflation.

The devaluation of credit is expected to fuel inflationary pressures as people understand the declining value of credit.

Alistair Macleod suggests that we are witnessing the early phases of a substantial reevaluation of the credit system with profound implications for the global economy.

Physical gold has been considered real money since Roman times, with no counterparty risk unlike paper gold or equities.

The enormous mountain of credit is becoming unstable, leading people to move from credit to money, which is essentially what's happening in the economy.

China has been stockpiling copper and silver, reflecting the global trend of investing in and stockpiling commodities.

Macleod argues that the US economy is not resilient and is being propped up by government spending, which is not productive.

The rise in interest rates is expected to expose malinvestments, particularly within commercial real estate and private equity sectors.

Higher interest rates are likely to reveal unsustainable leveraged positions, posing risks to financial stability and investment portfolios.

The Federal Reserve's focus on core CPI, excluding volatile energy and food prices, has revealed unexpected rises in the past two months.

The rise in gold investors' interest reflects a growing appetite for safe-haven assets amidst economic uncertainties.

Macleod concludes that the gold price is strong because foreigners prefer gold over dollars, indicating a loss of faith in credit currency.

The global economy is experiencing a shifting landscape marked by concerns over inflation and the stability of the credit system.

The rise in interest among gold investors may impact traditional investment strategies, signaling a potential shift in value for the credit complex.

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