Sometimes the dangerous parallels are just to obvious to ignore.
Way back, okay, perhaps still in my lifetime but not that far back, the United States experienced a massive inflationary scare due to the just recognized housing crisis which everyone assumed the government would bailout and inflate the debt away.
For example, this headline from way, way back in June of 2008 provides a parallel example to what Americans in the lowest 70th percentile caste are experiencing now:
Dollar buys less as costs of basics such as bread, milk and gasoline easily outpace rate of inflation
Wow, seems like we are all having flashbacks of that headline now, which seems just as relevant today.
This brings us to the question, just how did gold behave in that era? Pretty much as expected as everyone with a brain after the collapse of Bear Stearns and the GSE’s thought it was 1929 all over again.
As the chart above via TradingView.com so aptly illustrates, as inflation moved higher, so did gold. However, the move in gold was not due to inflation alone. It was also due to an alleged restrictive Federal Reserve policy which was offset by fiscal overkill in spending and the Federal Reserve allowing banks to do what ever the hell they wanted.
Gold sold off as investors and banks needed to raise actual cash from June through December of 2008, but the Federal Reserve’s beginning of QE infinity scared the crap out of the sane souls in 2009 as an epic economic collapse was anticipated.
So let’s fast forward to this era and the new highs in gold and yes, inflation indexed to reality.
Same chart updated to the current era. What does anyone who is sane notice?
That’s correct, inflation is still surging, albeit at a slower pace, and that there has been no indication of disinflation nor course change of note that extreme asset prices are in any sort of phase beginning to decline nor warn about potential deflation.
For those who haven’t been paying attention, once this particular downtrend or deflationary cycle begins, a correction in asset prices of 20% would only be considered minimal at best.
Gold held up well in 2008, hence it should hold up better in 2025.
Is anyone reading or listening to the historical warning?
Only the central banks and us older goldbugs at this point in time.
