The Form of Today’s Monetary Collapse

The first thing to consider is the current relationship of the quantity of money to the economy. US dollar M3 money supply, the broadest definition of money, has increased along with US GDP: M3 stood at $18.327 trillion last July, while second quarter GDP was estimated at $19.52 trillion. The closeness of the relationship between these two figures is explained by the nominal GDP total being inflated by increases in the money quantity. The match is never perfect, because there is always some consumer expenditure which is subject to estimates, future revisions, or simply not captured by GDP. To these we can add statistical error. Furthermore, at the beginning of the inflation there would have been a base level for GDP when money was sound from which subsequent inflations occurred.

The degree of the dollar’s loss of purchasing power is deliberately understated in official statistics. Originally, the policy was to reduce the cost to US and other governments of indexation introduced following the 1970s decade of price inflation. It is remarkable that the statistical suppression of changes in the general level of prices, now adopted in all advanced economies, is rarely questioned. Consequently, the scale of the fall in the purchasing power of fiat currencies has been ignored with some important consequences, at least for governments and their central banks, which are concealing evidence of the failures of monetary and economic policies.

Figure 2 compares the cumulative increase in the general level of prices measured by the CPI, and the Chapwood index — comprised of “the top 500 items on which Americans spend their after-tax dollars in the 50 largest cities in the nation”. The Chapwood price inflation numbers used in the chart are the arithmetic average of the fifty cities, the last data points being end-June 2020. Additionally, the growth of M3 money supply is included.

It should be clear that changes in the general level of prices are a theoretical concept which cannot be measured, because it is different for every individual. An average is therefore no more than an indication, even assuming the evidence is not manipulated by vested interests. Bearing this in mind, the cumulative price effect of the official cities’ CPI over the last ten years is for it to have risen by only 19%, compared with the Chapwood index which rose 159%, compounding by about 10% annually. By way of confirmation that the Chapwood figures are closer to the truth, we see that USD M3 diluted the dollar by increasing 109% over the period.

The lower increase in USD M3 relative to that of the Chapwood index suggests that as well as the dilution of the dollar’s spending power in a general sense, holdings of money have also been reduced relative to the commonly bought goods in the Chapwood index. In other words, consumers appear to show a relative preference in their spending for their common purchases over their less common purchases. This could be taken to be evidence of the earliest stages of a reduction of money balances in favour of everyday purchases. It is inconsistent with the official story upon which monetary policy is based, whereby the monetary authorities and their epigones delude themselves that price inflation is contained by the two per cent annual target, with some of them even claiming price inflation is banished for ever.

Figure 3 further illustrates the ineffectiveness of monetary policy by expressing GDP in 2010 prices adjusted by the CPI (the state’s version of real GDP), by the Chapwood index and finally by M3 money supply.



The monetary authorities claim that before the coronavirus crisis they had stabilised the US economy following the Lehman crisis. Measured by the CPI, by end-2019 the economy had grown by nearly 22% over nine years “in real terms”. But because the CPI is a heavily supressed measure of price inflation, the truth is different. The Chapwood index and USD M3 tell us that adjusted by these measures, GDP has more than halved from $15,241bn to $6,818 and $7,309bn respectively, measured by a base of 2010 dollars.

To be clear, GDP is simply a money total of all recorded transactions. It does not tell us anything about their quality, or indicate the degree of economic progress, or the lack of it. As always, there have been winners and losers. We can only conclude in the most general of terms that the contraction of real values has exposed the failure of monetary and economic policies.

Where it really matters is for governments, and the purchasing power of the taxes they collect.

A modern socialising government never reduces its expenditure, and budget deficits arise as a result of a reluctance to increase taxes to match spending. Prima facie it is evidence of an emerging hyperinflation, in that the decline in the purchasing power of the currency is driving the fall in the real value of taxation receipts, while at the same time it is realised that to raise taxes would be harmful to production, consumption, and therefore government finances.

Then came the coronavirus, an unexpected hit to nominal GDP, upon which government tax income depends. And now we have a second covid-19 wave, the economic consequences of which can only be guessed. Let us not forget that before all this happened, last September there was an emerging liquidity crisis evidenced by the failure in the dollar repo market, indicating, in all likelihood, the end of bank credit expansion. And we should also remember that the trade tariff war between the world’s two largest economies brought the growth of international trade to a sudden halt.

Anyone with an eye for the economic consequences of all these developments can only conclude that in addition to the already growing gap between government spending and tax receipts, governments are not just having to rescue their tax bases from a one or two-off hit from the coronavirus, but further rounds of inflationary expansions will follow at an increasing pace. Purely in terms of money quantities, hyperinflation is already well entrenched for the US dollar and all other fiat currencies subject to the same political and factual dynamics.

- Source, Goldmoney

Hyperinflation is Here

In the last ten years I have waged two crusades to bring attention to issues I believe to be in the public interest. From 2011, I wrote a series of articles about China’s gold policy, which had been accumulating physical gold from as long ago as 1983. The meme that gold was moving from west to east became broadly understood and almost a cliché. The second crusade was to inform the public that the business or trade cycle was only the symptom of a cycle of bank credit, which inevitably ends in a crisis of credit contraction.

It is now time for a new campaign, on a subject which I have been writing about in recent months, and that is to inform the wider public that their governments and their fiat currencies are now in a state of hyperinflation. It is not a development on the far horizon as many might think; it is already here.

What is hyperinflation?

To understand why hyperinflation is already with us is to know what constitutes hyperinflation. It is not rising prices, or a condition that exists when prices increase above a predetermined rate: rising prices are the consequence of both inflation and hyperinflation. As Milton Friedman put it, inflation is always and everywhere a monetary phenomenon, though he spoiled it by continuing, “…in the sense it is and can be produced only by a more rapid increase in the quantity of money than in output.”[i] He was wrong on that last bit, conflating the price effect with the increase in the quantity of money. When even so-called monetarists are imprecise about inflation, let alone hyperinflation, it is hardly surprising public confusion is widespread.

There can only be one definition of hyperinflation, and that is the one headlined above, which you won’t find in any textbook. There is even no definition of it in von Mises’s Human Action, only of inflation, and that is more a description than a definition. And since it is a relatively recent phenomenon of unbacked fiat currencies, hyperinflation was never defined separately from inflation by classical economists. The difference between inflation and hyperinflation cannot be distinguished by degree either.

Have a look at US M1, the quantity of narrow money in the American economy, shown in Figure 1.

The progression of annualised monetary inflation from under 6% before the Lehman crisis, to 9.6% subsequently until March this year, and 65% in the thirty weeks since is clear from the chart. If the monetary authorities have the knowledge, the mandate, the authority, the ability and the desire to stop inflating the currency, we would not describe it as hyperinflation, instead deeming it to be no more than a brief period of exceptional inflation before a return to sound money policies.

But sound money was emphatically discarded in 1971, when the post-war Bretton Woods agreement was finally abandoned — not that the monetary regime at that time was in any way sounder than Adam’s fig leaf was an item of clothing. For the fact of the matter is that sound money in America was arguably abandoned long ago, with the founding of the Fed at Jekyll Island before the First World War.

As a means of funding government deficits, inflation is capable of being stopped by cutting government spending and/or raising taxes. But now, a one-off increase of 65% of narrow money is to be followed by another massive expansion already in the wings. The hope is that that will be enough, just as the original 65% increase in M1 was hoped to be enough to ensure a V-shaped recession would be followed by a return to normality.

The early stages of a hyperinflation are always seen by the monetary authorities as the only policy to pursue. They convince themselves that there are either no consequences, or that they can be controlled. An example of the genre is found in a paper by Michael T Kiley, a senior Fed economist.[ii] In August he concluded that the lack of further room to cut interest rates to deal with the coronavirus requires quantitative easing to a total of 30% of GDP, or $6.5 trillion, to offset the lack of room for manoeuvre on interest rates. Kiley writes that about $3 trillion had been enacted between end-February and end-June, leaving a further $3.5 trillion to come. If we assume the full $6.5 trillion stimulus is enacted by next February, then the increase reflected in narrow money could be to more than double it.

Kiley wrote his paper before the second coronavirus wave commenced. He was modelling an economic contraction measured in real GDP of just 10% in the second quarter (actually 9.5% — not to be confused with the annualised rate reported at 32.9%). But, as I pointed out in last week’s article, with monetary inflation running at such a rate, a dollar last February is not the same as an inflated dollar next February, being diluted on Kiley’s figures by $6.5 trillion. The consequence is some extremely damaging intertemporal shifts, as described in the Cantillon effect, whereby ultimately both productive workers and the poorest in society lose savings, salaries and social security benefits through loss of the dollar’s purchasing power for the benefit of the government, its agencies, and big business.

In his economic model, Kiley flattens the Phillips curve, apparently in an attempt to goal-seek a preferred outcome. The Phillips curve is meant to replicate graphically the relationship between inflation and unemployment, the idea being that an increase in price inflation goes along with a reduction in unemployment. Flattening it is the same as assuming that at a deemed level of full employment prices will not rise as much as previously modelled. But it is one thing to forecast such a relationship when the inflation “stimulus” is in the order of a few per cent, when arguably the public is more aware of the stimulation effect of monetary inflation than they are of the dilutionary effect on the money, but it is another matter when it is as dramatic as it is today.

We must resist the temptation to accept a mathematical relationship between prices of goods and services and the rate of employment, such as predicted by the Phillip’s curve. Whatever the level of employment, production adjusts because of the division of labour. In their dismissal of Say’s law, modern economists fail to realise that production and consumption broadly march or retreat together. Other than users of currency being temporarily conned by the initial effects of monetary stimulation, there is no enduring relationship between the quantity of money and employment.

Errors introduced by the mathematical economists through artifices such as the Phillips curve conceal the consequences of policies based on their forecasts at the outset. Consequently, the recommendations of senior economists at the Fed using economic models based upon macroeconomic assumptions give false comfort to the committees they advise. Furthermore, the annualised rate of the budget deficit since March was about $4.4 trillion, financed entirely through monetary expansion and significantly greater than covered by declining tax income.

If these conditions persist in the new fiscal year — which seems increasingly certain, Kiley’s calculation of the further $3.5 trillion stimulus underestimates the problem. According to an op-ed by Allister Heath in today’s Daily Telegraph, Larry Summers, the US economist and arch-inflationist, believes that the cost of covid-19 will reach 90% of US GDP, substantially more than Kiley’s estimate of 30%. Over-dramatic perhaps; but can we envisage that the forthcoming stimulus package, and then undoubtedly the one to follow that, will restore normality and set the budget deficit firmly in the direction towards a balance? If the answer is no, then we already have hyperinflation.

- Source, James Turk's Goldmoney

John Rubino: 2020 Setting Us Up For the Real Crisis That’s Coming

In case you were reluctant to start preparedness steps before 2020, perhaps the COVID-19 lockdown, civil unrest, wildfires, hurricanes, and anticipated presidential election chaos have convinced you that having a “Plan B” might be good idea. 

According to this widely followed guest, we would do well to heed the lessons that 2020 has been providing, since in his analysis we are still facing the most convulsive crisis yet. 

John Rubino, founder of DollarCollapse.com, returns to Liberty And Finance / Reluctant Preppers to answer viewers’ questions and alert us to the critical risks we face in the time ahead. 

John also reveals the truth about gold’s role in banking that’s starting to leak out, even from official sources.

- Source, Liberty & Finance

The Relationship Between Inflation and Prices

Assuming no change in the average cash balances held by a population, over time there must be an inverse relationship between the expansion in the quantity of money in circulation and the diminution of its purchasing power. 

This is unarguable in logic and to argue otherwise is to subscribe to a version of monetary perpetual motion. By the same token, while the effects on individual prices also have to allow for changes in the factors specific to them, the effects of monetary debasement on the general level of prices should be clear. 

Now it is time to introduce a second factor; changes in the average cash balances held by a population.

Changes in cash balances are an expression of relative preferences between money and goods. If a population as a whole is satisfied with the stability of money as the medium of exchange, it will be happy to retain balances surplus to its immediate needs. We see this even with inflating currencies, such as the Japanese yen, where irrespective of the level of interest rates monetary expansion merely accumulates as bank deposits. It is unusual for a population to go to the extremes evident in Japan, but equally, a population which realises its currency is declining in purchasing power has every reason to dispose of it in favour of goods, maintaining lower balances in consequence.

The complete rejection of a currency as the medium of exchange renders it utterly valueless and is the common outcome to every hyperinflationary collapse. Governments that become ensnared by inflationary financing face the growing certainty of a Venezuelan outcome.

For now, monetary authorities around the world are relying on public ignorance about money and the theory of exchange. Those who trouble themselves to consider how their currency’s purchasing power is actually changing will notice how it is declining more rapidly than official statistics say. This is deliberate. After the introduction of widespread indexation in the early 1980s governments devised methods to reduce the costs incurred. Changes in statistical methodology have achieved that, with consumer price indices now entirely suppressed, so much so that central banks claim to be struggling to get the CPI to rise to its two per cent target.

The evidence from independent analysts in America such as Shadowstats and the Chapwood Index is that real world prices there are rising at closer to a ten per cent rate and have been for the last ten years. With the FMQ having grown at a monthly compounding annualised rate of 9.6% from the Lehman crisis to the end of 2019, the truth about price inflation appears closer to independent analysts’ calculation than the official CPI. Furthermore, there is little evidence of noticeable change in savings rates or cash hoarding over the period, which would have affected the general level of prices.

The first to realise that the purchasing power of a currency is declining and will continue to do so are usually those who own it for reasons other than as a normal medium of exchange. These are foreign holders who have accumulated currencies other than their own government’s fiat money as a result of trade and have chosen to retain it instead of selling it in the foreign exchanges. And there is a second group of foreign holders which has diversified investment portfolios into foreign financial markets.

These groups are primarily sensitive to external economic and financial factors, such as changes in the outlook for trade, financial asset values and their requirements to hold liquidity in their own currencies. It stands to reason that a state that manages to run continuing deficits on the balance of trade and retain an accumulation of foreign ownership of its currency is vulnerable to changes in international sentiment. This is the situation the dollar finds itself in, with US Treasury TIC figures revealing foreigners own financial securities worth approximately $20.6 trillion, and additionally bank deposits and commercial and US Treasury short-term bills totalling $6.15 trillion. In other words, foreign ownership of the dollar is 130% of the CBO’s estimate of current US GDP.

The accumulation of foreign dollar positions was due to a number of factors: the dollar is the international reserve currency, trade expectations were of continual global growth, the perpetuation of US trade deficits, increasing portfolio investment and a rising dollar. Global trade is now contracting, and the dollar has begun to decline. Commercial priorities are changing from global expansion to conserving capital.

With the global economic outlook deteriorating rapidly, the dollar is notably over-owned by foreigners, which is not counterbalanced by American ownership of foreign currencies. Most of US foreign financial interests are denominated in dollars with exposure to foreign currencies remarkably small at $714bn at end-June.[ii]

China has already declared a policy of reducing her dollar investments in US Treasury bonds and is selling her dollars to buy commodities. Few realise it, but China is doing what ordinary people do when they begin to abandon a currency — dumping it for tangible goods which will cost more in future due to the dollar’s declining purchasing power. And as the dollar’s purchasing power declines measured in commodities more nations are likely to follow China’s lead.

When you see a chart of the expansion of money supply, as illustrated in Figure 2 below and combine that with a falling dollar in the foreign exchanges, it is only a matter of time before increasing members of the domestic population begin to follow the foreigners’ lead.

Compared with the past, there is a generation of millennials which through their understanding of cryptocurrencies has learned about the debasement of fiat currencies by their governments. It remains to be seen whether this knowledge will bring forward the general public’s understanding of monetary affairs for an earlier abandonment of money for goods.

- Source, James Turks Gold Money

Why Quantitative Easing is Inflationary

On 23 March the Federal Open Markets Committee (FOMC) announced unlimited QE for both US Treasury stock and agency debt as well as however much liquidity commercial banks need.[i] While judging the expansion of the budget deficit to be inflationary, it is only inflationary to the extent that it is not financed by savers, either increasing the proportion of their savings relative to immediate spending, or to the extent they divert their savings from other investment media. In the latter case, citizens have been committing their savings more to equity markets than bond markets. The returns for discretionary portfolios managed on the public’s behalf have also found better returns in equities than in government and corporate bonds, though when assessing increasing investment risk Treasury stock is seen to be a safe haven in bond portfolios. Pension funds and insurance companies also allocate cash flow to US Treasuries and to the extent that this is the case, the issuance of further government debt is non-inflationary.


Furthermore, if a bank does not increase its balance sheet by expanding bank credit, its participation in the Fed’s QE programme is not inflationary either. For this to be the case, it would have to sell existing stock, call in loans or subscribe on behalf of clients.

By seeing them through a Nelsonian blind eye these factors give some encouragement to the Fed in funding the Treasury through QE, particularly since the statistics reflect a jump in savings, as the following chart from the St Louis Fed illustrates.

More correctly, the chart reflects the fall in spending when people locked down, as well as the $1,200 stimulus checks distributed to households at end-April, which marked the peak in the chart. Since then, there has been some downward adjustment, partly because some spending has returned, and the backlog of essential spending, such as property maintenance, is being addressed.

The evidence is not yet strong enough to claim this statistical shift in savings habits is permanent. Furthermore, being calculated as the percentage of personal disposable income that is not spent and given the high levels of personal debt throughout the population, much of these so-called savings will have disappeared into credit card and debt repayments. It is more likely that with rising unemployment and roughly 80% of the American salaried population living paycheque to paycheque, that far from there being a higher savings rate, personal finances have deteriorated so much that money is being withdrawn from savings on a net basis, to acquire life’s essentials. In fact, the savings rate is one of those unmeasurable economic concepts, and the reality is that Joe Average is worse off in today’s contracting economy and is drawing down on savings in order to subsist.

The non-inflationary element of QE then boils down roughly to increases in insurance company and pension fund investments in Treasury stock and the increase in bank holdings and reserves at the Fed not funded through the expansion of bank credit. 

But this creates another factor: the extent to which existing bond investments are sold in order to subscribe for Treasury stock inevitably undermines corporate bond markets and their ability to satisfy their funding requirements. 

And it is for this reason the Fed has appointed BlackRock to spearhead its purchases of corporate debt to ensure liquidity is available for those markets and to put a cap on risk premiums. Therefore, where banks do not expand credit to buy new Treasury stock, the Fed steps in to compensate with additional monetary inflation.

It has been necessary to go into the mechanisms behind funding government deficits in some detail to establish the inflationary consequences of QE, and to refute claims by monetary authorities and others that QE is either not or only partly inflationary, and so is consistent with the Fed’s mandate. No, with the exception of insurance and pension fund subscriptions, the Fed’s QE is almost pure monetary inflation.

- Source, James Turk's Goldmoney

The Emerging Evidence of Hyperinflation

No doubt, the reluctance to reduce, or at least contain budget deficits is ruled out by the presidential election in November. But whoever wins, it seems unlikely that government spending will be reined in or tax revenue increased. 

For the universal truth of unbacked state currencies is that so long as they can be issued to cover budget deficits they will be issued. 

And as an inflated currency ends up buying less, the pace of its issuance all else being equal will accelerate to compensate. It is one of the driving forces behind hyperinflation of the quantity of money.


Since the Lehman crisis in August 2008, the pace of monetary inflation has accelerated above its long-term average, and the effect is illustrated in Figure 1 below.

Figure 1 includes the latest calculation of the fiat money quantity, to 1 August 2020. FMQ is the sum of Austrian money supply and bank reserves held at the Fed — in other words fiat dollars both in circulation and not in public circulation. 

Because commercial banks are free to deploy their reserves within the regulatory framework, either as a basis for expanding bank credit or to be withdrawn from the Fed and put into direct circulation, whether in circulation or not bank reserves at the Fed should be regarded as part of the fiat money total.

It can be seen that the rate of FMQ’s growth was fairly constant over a long period of time — 5.86% annualized compounded monthly to be exact — until the Lehman crisis when the rate of growth then took off. Since Leman failed in 2008 FMQ’s total has grown nearly 300%.

Since last March growth in the FMQ has been unprecedented, becoming almost vertical on the chart, triggered by the Fed’s response to the coronavirus. 

And now a second wave of it has hit Europe and the early stages of a resurgence appears to be hitting the land of the dollar as well. With lingering hopes of a V-shaped recovery being banished, a further substantial increase in FMQ is all but certain.

Already, FMQ exceeds GDP. If we take the last time things were normal, say, in 2005 when the US economy had recovered from the dot-com crash and before bank credit expansion and mortgage lending become overblown, we see that in a functioning relationship FMQ should be between 35%—40% of GDP. 

But with the US economy now crashing and FMQ accelerating, FMQ is likely to be in excess of 125% of GDP in the coming months.

What is the source of all that extra money? It is raised through quantitative easing by the central bank in a system that bends rules that are intended to stop the Fed from just printing money and handing it to the government. Yet it achieves just that. 

The US Treasury issues bonds by auction in the normal fashion. The major banks through their prime brokers bid for them in the knowledge that the Fed sets the yield for different maturities through its market operations. 

The Fed buys Treasury bonds up to the previously announced monthly QE limit, only now there is no limit, giving the primary brokers a guaranteed turn and crediting the selling banks’ reserve accounts with the proceeds.

This arm’s length arrangement absolves the Fed of the sin of direct money-printing but evades the rules by indirect money-printing. The Treasury gets extra funding through this roundabout arrangement. Participating banks generally expand their bank credit to absorb the new issue, which they then sell to the Fed, which in turn credits the banks’ reserve accounts. 

The Treasury gets the proceeds of the bonds to cover the deficit in government spending, and the banks get expanded reserves. The Fed’s balance sheet sees an increase in its liabilities to commercial banks and an increase in its assets of Treasury bonds. The Fed also funds agency debt in this manner, mostly representing mortgage finance.

Under President Trump, the Treasury’s current deficit initially expanded as a planned supply-side stimulus to the US economy to the tune of just over a trillion dollars before covid-19 created additional financial chaos. Businesses experienced severe dislocation and have suffered a widespread collapse. Consequently, and together with the direct injection of money into each household, the Congressional Budget Office revised its trillion-dollar deficit for the financial year just ended as the following screenshot from its website indicates:



Note how half the government’s income arose from revenues and half is covered by sales of government debt to the public (i.e. the commercial banks), which at the end of fiscal 2020 (ended yesterday) is estimated to total $20.3 trillion. 

But given that the first half of that fiscal year was pre-lockdown and the annualized rate of the deficit at that time was about a trillion dollars, simplistically the annualized rate of the deficit’s increase since last March is in the region of $4.4 trillion. 

Incidentally, the CBO’s economic projections look too optimistic given recent events, in which case budget projections for this new calendar year will be adjusted for considerably lower revenue figures, and significantly greater outlays at the least.

- Source, James Turk's Gold Money

Gold & Silver Unstoppable: China Dumping USD For Real Stuff Right Now

Respected analyst Alasdair Macleod, head of research at Gold Money, who has gone out on a limb to declare we are ripe for a banking crisis very soon, and a fiat currency failure by the end of the year, returns to Liberty and Finance to report that China is already dumping the Dollar and buying commodities hand over fist to get rid of its dollars before everyone else realizes the USD is accelerating into failure. 

Alasdair further sees the flagship monetary metals will be unstoppable in the face of the inescapable financial corner the Fed has backed into.

- Source, Liberty & Finance

It All Goes Back To Gold and Silver

James Turk: The Existing Monetary Order is Not Going to Survive

Paul Buitink talks to James Turk, founder of GoldMoney, about the current economic crisis.
James thinks it will inevitably lead to a collapse of confidence in fiat money and hence hyperinflation. 

James also believes companies should just be able to go bankrupt. 

He criticizes fiat currencies and calls upon people to return to sound money since corrupt money has corrupted the system. 

The existing monetary order is not going to survive. He believes in buying gold and silver to protect your purchasing power. Gold needs to be in the hands of the people, not the central banks he says. He also likes Bitcoin better than fiat.

- Source, Reinvent Money

Where is All That Gold Being Stored?

WE'RE in the midst of a modern-day gold rush.

The precious metal has reached record high prices in recent days. A survey of 1,000 people by Magnify Money found that one out of six have invested in gold or other precious metals since May, and about half of Americans are seriously thinking about buying gold.

(This after Gallup reported in April that Americans had cooled somewhat on stocks as a long-term investment.)

Whether these people are stocking up on gold because they're worried about a pending apocalypse or simply convinced that it's a fabulous investment, they do have one major issue: storage. Bars and coins are bulky (and let's not get started on jewellery, which can be complicated emotionally).

With anxiety about the economy increasing - which tends to rise any time there's political or world turmoil - the need for storage is growing, too, and options are expanding to meet it.

"Gold and silver bullion storage options have simply grown more in location diversity, pricing - with even some offering short-term collateral loan options," said James Anderson, a research executive at SD Bullion in Toledo, Ohio.

"When I began in this industry pre-2008 financial crisis, there were perhaps 10 to 20 domestic bullion storage depositories. Now, there are hundreds in the US and abroad."

People tend to buy gold when they fear a sustained loss in stocks, bonds, real estate or other traditionally profitable investments, said Adrian Ash, the director of research for BullionVault in West London.

Increasing capacity

So private vault operators have been increasing their capacity as well - but specifically within presumed politically safe locations like Switzerland and Singapore, said James Turk, the founder and director of Goldmoney Inc in Toronto.

Switzerland's banks have always been deemed a safe haven for assets and precious metals, but in recent years many people started to lose faith in banks.

As a result, there has been an increased demand there for safe deposit boxes there that aren't run by banks.

"In late 2019, we even had to build additional boxes, as we had reached 100 per cent of our capacity," said Michael Hardmeier, the CEO of Sincona Trading AG, whose headquarters are in a former bank building in central Zurich.

Swiss vaults tend to be more expensive than those in England, where a new spot opened that was designed for those accustomed to a lavish lifestyle.

The vault is inside a former mansion run by International Bank Vaults (IBV).

A chauffeur driving a Rolls-Royce picks up clients and delivers them to the London mansion, where white-gloved custodians transfer them to their boxes (after a quick fingerprint and iris scan, of course).

Those boxes are stored within a steel-lined vault supposedly impenetrable to anyone attempting to illegally gain access from any angle.

You may have to spend a few of those gold bars to store them: It's advertised as the most expensive safe deposit box in the world, and the company claims it's available only to billionaires, with the smallest box starting at £600 (S$1,017) to rent (this would fit just a few gold bars).

IBV London managing director Sean Hoey said that, unlike a bank, IBV allows clients to buy gold and to store it - and it will buy back the gold.

Also, many gold owners believe that vaults, unlike banks, are somewhat resilient to an economic meltdown.

"You can use a safe deposit box, but folks worry that if there was an economic meltdown, the banks might close, and your metals would be trapped inside that bank," said Gary Cubeta, a gold dealer in Arizona and the president and founder of Insurance for Final Expense.

Even without an economic meltdown, there's less faith in bank safe deposit boxes, because there aren't federal laws governing these boxes, so if anything is stolen or destroyed, the customer is typically out of luck.

Old-fashioned route

That may be why some are choosing to go the old-fashioned route and are storing their gold at home.

Numerous YouTube videos and bloggers explain how to bury gold bars in everything from mincemeat to the backyard.

But it's wise to consider your home options before simply stuffing your gold under a tree.

Mr Cubeta, who advises gold owners to store their gold within 15 to 20 minutes of their home so they have easy access to it in case of a financial meltdown, said the best thing you can do is to keep half in a home safe while putting the other half in a safe deposit box.

"You need a safe especially designed for precious metals," he said, explaining that most gun safes can't withstand the heat of a fire, while precious metal safes will keep your gold protected for two hours.

Before moving your gold home, you need to contact the insurer that issues your homeowner's policy, because most don't cover large amounts of gold stored at home.

"On average, the standard homeowner's insurance policy covers around US$1,000 for jewellery or valuables, and the average home insurance policy is set up to protect the average household, so the limits will not be sufficient to cover expensive or valuable items," said Lev Barinskiy, the CEO of SmartFinancial, an insurance comparison site.

There are also storage options where you never even see the gold you own. Customers buy a digital token backed by physical gold held in a vault, said Joonas Karppinen, head of trading at InfiniGold.

"A token provides customers with actual ownership of the gold in question - which is essential, especially if your content insurance does not cover your bullion portfolio stored in the house," he said.

That's all good, unless you want to feel its weight in gold. Literally.

- Source, Business Times

The Next Phase of the Great Silver Squeeze

Banking Crisis? Currency Crisis? Silver Short Squeeze on the COMEX? Alasdair Macleod, Head of Research at GoldMoney.com returns to Liberty and Finance / Reluctant Preppers to give us an update! 

His recent analysis foresaw a banking crisis as soon as the end of July 2020, and a currency crisis yet this year. What is the latest from this engaging and respected analyst, so we can be ready for what comes next? ​

- Source, Liberty & Finance

The Price of Gold andSilver is Infinity

Finance and economic expert Alasdair Macleod says, “I think the problems with the currency are going to happen by the end of this year. 

I think the problems of the COMEX are going to happen considerably before that. I think they are going to be tied into a wider banking crisis. A banking crisis is certain. I cannot see how it can be avoided.

If our end point is the purchasing power of the dollar goes to zero, then you can see $1,800 for the price of gold and $19 for the price of silver is chicken crap compared to where it’s going to go. 

So, this is a major, major move that is happening, not because they are buying gold and silver so much, but because people are beginning to realize what is happening to the purchasing power of the dollar, pound, euro and so on and so forth. 

That is the thing to keep in mind.I think the dollar will be destroyed by year end, and the price of gold and silver is infinity.

 I think the banking crisis could start in a month. Look what’s happening to their balance sheets.

I think the collapse is likely to be so rapid that in the absence of any other information, the best thing to do is to hold on to gold and silver as an insurance policy just in case I am right.”

- Source, USA Watchdog