Gold & Silver Update: This Isn’t a Rally—It’s a Currency Reset | Mike Maloney

Summary

Mike Maloney discusses the rising value of gold and silver amidst a global monetary reset, highlighting the economic shifts driving their demand. He explains how China's new gold mandate for insurance companies and other international trends are pushing gold prices higher. Maloney also touches on the controversial world of paper gold and gold leasing, emphasizing the disconnect between paper gold and physical reserves. He warns of a potential gold panic due to paper gold leverage and stresses the importance of owning physical gold to avoid the dangers of fiat currency devaluation. Maloney ends by pointing to Venezuela's move toward using gold for everyday transactions as a real-world example of gold's enduring value.

Takeaways

• 😀 Silver is currently considered a significant bargain, priced at about $40 per ounce, compared to its inflation-adjusted high of $1,640 in 1980.
• 😀 The current bull market is not driven solely by rising gold and silver prices but by the depreciation of global currencies.
• 😀 Retail sales of gold and silver have been declining since 2008, with a notable drop in retail demand despite gold and silver prices increasing.
• 😀 China's new mandate requires insurance companies to allocate 1% of their assets to physical gold, creating structural demand and potentially driving prices up by absorbing 15-20% of the global mine supply.
• 😀 Indian pension funds may soon be allowed to invest in gold ETFs, potentially boosting demand for gold in India.
• 😀 Indonesia is considering reducing its gold exports to keep more gold within its borders as a strategic reserve currency.
• 😀 Florida has passed a law allowing transactions using gold and silver, potentially remonetizing these metals, though practical use is still uncertain.
• 😀 Gold prices have tripled in Japan in the past five years, with Japan's debt-to-GDP ratio worsening, signaling potential for further gold price increases.
• 😀 The global allocation of gold in financial assets has dropped to 0.5%, but a return to the historical average (2%) could see a fourfold increase in investment demand for gold.
• 😀 The US dollar has been devalued and is now only worth 1/3,300th of an ounce of gold, suggesting that gold's value is rising while the dollar depreciates.
• 😀 Gold leasing and rehypothecation are practices that create a paper gold market, where gold is leased multiple times, resulting in significant leverage (up to 100:1). This could lead to a 'gold panic' if physical gold demand outstrips supply, driving prices to $25,000 per ounce or higher.
• 😀 Trump and Musk backed off from visiting Fort Knox due to concerns about gold leasing and rehypothecation, which might distort the true value of physical gold in the US reserves.

Q & A

What is the current price of silver compared to its inflation-adjusted high in 1980?

Silver is currently priced at about $40 an ounce, whereas its inflation-adjusted high in 1980 is approximately $1,640 an ounce.

Why does Mike Maloney emphasize the importance of understanding the global monetary system reset?

Maloney believes that the rising prices of gold and silver are not due to these metals becoming more valuable, but because currencies are depreciating. This is why he stresses understanding the global monetary system reset.

What is the significance of China's gold mandate for insurance companies?

China's new mandate requiring insurance companies to allocate 1% of their assets to physical gold is expected to absorb 15-20% of global annual gold mine supply, significantly impacting global gold prices and market dynamics.

How might India’s pension funds affect the gold market?

India's pension funds are considering investing in gold ETFs, which could increase demand for gold if they are allowed to invest in this asset class, further supporting gold's price.

What is the significance of Florida's law allowing transactions using gold and silver?

Florida's law permitting transactions in gold and silver is seen as part of the remonetization of precious metals, though it still requires coins to be valued at face value, which limits its practical use.

Why does Maloney argue that gold and silver are still a bargain today?

Maloney points out that based on historical inflation adjustments, both gold and silver are significantly undervalued today compared to their highs in the 1980s, especially considering the effects of current monetary policies.

What is the potential risk of the gold leasing system discussed in the script?

The gold leasing system creates a paper gold market that is 100 times larger than the physical gold market. If too many investors demand physical gold, it could lead to a gold panic, dramatically increasing prices due to limited physical gold supply.

What is the role of the Federal Reserve’s gold certificate account in the current monetary system?

The Federal Reserve holds gold certificates, which represent America's gold reserves. These certificates are used as collateral for Federal Reserve notes, but the gold itself is largely locked in vaults, leading to a discussion about its true ownership and accessibility.

How do gold prices relate to the US dollar’s value in the script?

The script emphasizes that the US dollar has been severely devalued, with the dollar now only worth about 1/3,300th of an ounce of gold. This highlights the growing disparity between paper currency and gold's intrinsic value.

What is the argument against a gold-backed currency system, according to the script?

Maloney argues against a gold-backed currency system because, despite gold being valuable, a gold standard could lead to another fractional reserve system, which could still be manipulated by central banks and financial elites, thus undermining the true value of money.