(Schiff)—The first half of 2023 was a record-breaking moment for central bank gold buying, led by none other than China and Russia. Organizations like the World Gold Council reported a staggering increase compared to 2022:
“On a year-to-date basis, central banks have bought an astonishing net 800t, 14% higher than the same period last year.”
Whether or not The January Effect will apply to the gold price as we finish the first month of 2024, there are plenty of indicators that the central bank buying spree will continue for at least the first half of the new year. Accelerating de-dollarization is just one factor, as powerhouses like China and Russia continue strategically moving further and further from the grips of USD hegemony.
Of course, actions by the Biden administration to isolate Russia with sanctions in the wake of the Ukraine conflict only provide further impetus for the Russians to continue divesting in any way they can from the US dollar. Combined with a volatile ruble and a wave of new American spending to feed its proxy wars in Ukraine and Israel, it only makes sense that Russia’s gold coffers will continue to grow.
You can also bet on China and Russia buying significantly more gold than what gets reported publicly, so the real numbers are always higher than they seem. As Jim Richards has pointed out many times, such as in this tweet from Q1 last year, countries like Russia and China hold gold acquired through off-the-books buying programs that far exceed what they officially claim:
“Central Bank of Russia reported a gain of 30 metric tonnes in its gold reserves. That’s after a year of flatlining more likely due to non-reporting than non-acquisition. Nice to see Russia back in the game.”
For more central bank gold-buying fuel, the Fed, claiming victory against inflation, has actually given up on fighting it. The Fed knows it backed itself into a corner and has no choice but to lower rates in 2024 — which means central banks will need a way to hedge against those easier money policies. And while the Fed’s balance sheet shrank in 2023, it didn’t even come close to closing the gap created by the trillions it added during the Covid era. Of course, that wouldn’t stop Powell from running his victory lap at 2023’s final post-FOMC press conference about stopping rate hikes:
“That’s us thinking we’ve done enough.”
However, lower rates in 2024 would bolster the case for even more inflation, not less — leading to a tanking dollar and surging relative prices for gold and other commodities. Peter Schiff isn’t the only one to have pointed this out, but all you have to do is forget what central banks say and look at what they do. The stage is set for banks to add more gold to their reserves to hedge against downward pressures on the dollar, even as the Fed claims victory over the inflation battle. The only question is which will occur first: a dollar crisis or a sovereign debt collapse? Central bankers aren’t going to wait to find out.
It's only the 2nd day of Jan. and the #NationalDebt already blew past $34 trillion. I think 2024 will set a record for the largest one-year increase in the U.S. National Debt in history. The only question is will there be a sovereign debt or #dollar crisis before the year ends.
— Peter Schiff (@PeterSchiff) January 3, 2024
After all, in 2023, not even higher nominal yields managed to slow down gold’s rally. Booming Treasury yields reflect less certainty in the health of the economy, not more, as investors flee to the perceived safety of Treasurys and bonds. But what goes up must come down, and a collapse in the Treasurys market would nuke the dollar, taking the rest of the economy with it:
“…a Treasurys crash will force the value of the dollar to plunge, which will lead to a brutal economic downturn — one in which the “standard of living” in the country will drop dramatically.”
Finally, 2024 brings even more uncertainty in the face of the US’s continuing proxy conflicts and, notably, a US presidential election that is reinforcing a global picture of domestic political instability. With candidates on both sides like RFK Jr. and Vivek Ramaswamy embracing anti-establishment messages about reigning in central banks, the military-industrial complex, and the US debt spiral, there are plenty of candidates shaking the nest in ways that would have been unheard of just a couple elections ago. As Robin Tsui of the South China Morning Post points out, somewhat obviously:
“…the potential for US government shutdowns, fiscal policy debates, and political stand-offs ahead of the 2024 US election cycle persist.”
It’s true that many economists and Fed officials haven’t given up hope for a ”soft landing” next year, which would imply decreasing demand for gold. But as time has pressed on, this is a claim that even they admit could end up being proven hollow. To any honest observer, more signs of instability, inflation, negative-yielding debt, and election-year madness all point to a strong need for safety throughout this year.
Looking past the claims that US bankers and officials are making in public, central banks know the truth: they need to keep gobbling gold. It’s the only strategic maneuver that makes sense, with few other meaningful ways to protect themselves from becoming collateral damage in the confluence of self-destructive economic meddling, overstretched foreign entanglements, and election-year political turmoil in the US.
Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
