Another interview with Keith Weiner.  Keith’s company, Monetary Metals, is set up to get gold circulating again.  The prerequisite for that is interest – interest in gold, paid in gold.  Louis James conducts a good interview.  I was impressed by his instant grasp of the fundamentals – including the purpose of Monetary Metals.  A bright guy.

There are some very good points clearly made in this interview that explain much about the current market situation and how it will impact the value of fiats.

“Claudio Grass (CG): In the last couple of months, we have seen volatility return to the stock markets and investor anxiety on the rise. The trade war and a slowing economy seem to seriously threaten the record bull market, while predictions of a recession hitting before 2020 are gaining traction. Many blame the trade war for the increased choppiness. Do you agree with this assessment, or do you think it is only exposing deeper problems?

“Keith Weiner (KW): The trade war cannot help. And in addition to the obvious problems of declining revenues (and standard of living for everyone), there is a monetary problem. Corporations all over the world borrow dollars. Trade restrictions make it harder for them to get dollars. This perversely drives up their demand for dollars. And a rising dollar, as they measure it in their native currency, puts additional stress on them. Their debt service payments are going up, just as their ability to generate revenue is going down.”

Read it all here

This week’s Report from Monetary Metals continues the dissection of precisely why using GDP as the measure of the health of the economy is dangerous.  Useful to the central banks, but far from showing the real picture as to what is happening in the economy.

“Today, let’s look at another problem with GDP. To understand it, let’s walk through a plausible scenario. It begins with Johnny Fastlane. Johnny borrows $10,000 on his credit card to (yes, our favorite example) go on a gambling vacation in Las Vegas. An airline carries away some of his cash. A hotel lodges some. A few restaurants eat it. And of course, the casinos roll in his dough.

“These businesses make their money (well, irredeemable currency), in exchange for provided services to Mr. Fastlane. They do not know that Fastlane borrowed it. They do not have any way to know it, and they do not care. Cash is cash. They book it as revenues. Fastlane may be leveraged, but they are not—yet.

“These businesses pay employees to provide their services. And the employees go home and spend it on food, entertainment, health care, etc. And for their own shelter and transportation, they borrow to pay for houses and cars. Fastlane’s leverage makes possible the leverage of several others. And of course the automaker, realtor, and building contractor have employees whose paychecks come from the revenues generated by the employees of the businesses that serve Johnny Fastlane.”

Read it all here

Monetary Metals in the US is the vehicle taking the world toward the Gold Standard.  This week’s Report sheds light on why people hold Gold – the real reason.

“We will start this off with a pet peeve. Too often, one is reading something about gold. It starts off well enough, discussing problems with the dollar or the bond market or a real estate bubble… and them bam! Buy gold because the dollar is gonna be worthless! That number again is 1-800-BUY-GOLD or we have another 1-800-GOT-GOLD in case the lines on the first number are busy!”

Read it all here.

Friday 31st May, 2019

Monetary Metals is a commercial company and its weekly commentary has been kept separate from the Institute website.  However, there is no better economic commentary out there and the insights are so profound, that they demand republishing on this website.

In this issue, it is not just the first part, though that is interesting enough, the second part, ‘The Supply and Demand Fundamentals (How Not to Launch a Gold Standard) is just as good.

“No amount of gold reserves can push a gold standard into the world as it exists today. It can only amount to a price-fixing scheme, where the government stands ready to buy or sell gold at its official price. When the market decides it wants the gold, it will buy relentlessly until the central bank runs out of gold and abandons the peg – alternatively they can abandon the peg earlier.”`

“To the extent they understand that the present system will collapse (we would not bet on this), they want the next thing. They may even think that next thing will be a government-managed, centrally banked, centrally planned gold standard. But if so, we can say for certain: it will not work.”