It’s one of those enigmatic moments in history. As economic conditions worsen, and so do socioeconomic conditions in turn, the performance and returns from stabler forms of capital (and the wealth of those who possess them) improve.
Those who have used foresight to get out of collapsing fiat currencies (the minority) will face some frustration from those who did not avoid the inevitable bust of conventional forms of wealth.
Before dealing with the social reality of what is happening, we should be very clear about reading the winds correctly, of course. What is happening? And why?
Let’s take the question of gold prices in relation to the prices of stocks like mining companies. There could be (and there is) earlier activity and stimulation in the gold stocks well before visible signs of revaluation of gold per se.
We know what is happening by both contemporary markers as well as by historical wisdom. True, these are unprecedented times, in which technological wild cards abound, yet history shows clear patterns when it comes to the results of in-bred economic practices over time.
We can actually start with the plain fact that when fiat currencies, let alone hegemonic currencies like the US Dollar, start faltering because of how they were used, as well as their lack of support in a calculable reserve capital (such as the previous world concorde using the gold standard), there is a domino effect with a late clamour towards stable investments. Gold, silver and other metals will rise in price. This is a fact, observed like recorded weather patterns.
This post was published at Gold-Eagle on September 4, 2014.