The expiring system (in progress for years, actual expiration date unknown) has limped along, through Fed (monetary) and government (fiscal) oversight, fabulously enriching the rich and impairing the middle and lower classes. The system has tilted the playing field heavily in favor of the ruling class. Yes, I am writing from within and about America.
It is beyond the scope of this article to go too far into the details, but money created out of nowhere (monetary) and spent into circulation (fiscal) must go somewhere. Where it goes is into assets and asset markets.
Who are the asset owners? The already wealthy (and getting wealthier just by existing within the system). Who are the paycheck-to-paycheckers and those struggling at the lower rungs? The not wealthy (and getting poorer as costs rise in the Keynesian system of inflation created from debt). It’s a rigged game that has been in play for decades.
A historical black and white photograph depicting President Nixon sitting with his economic policy advisors at Camp David, including Arthur Burns, Chairman of the Federal Reserve.
Let’s use the famous termination of the Bretton Woods system and closure of the gold window by Richard Nixon as a touchstone point. Tricky Dick, in concert with his economic advisors (including Fed chief Arthur Burns and future Fed chief Paul Volcker) supposedly thought they were addressing an inflation problem, but later in the decade made that problem so much worse. Remember this artifact from that period?
WIN!
The WIN noise hit its peak during a phase when was wearing its inflation-utility suit and blowing off to a price of $875/oz. in January, 1980. After that, Volcker, at least present for the closure of the gold window, later went balls out against inflation by aggressively hawkish interest rate policy as Fed chief.
Volcker’s ultimately successful monetary policy kicked off what I call the age of Inflation onDemand and the Continuum in Treasury yields that would permit all manner of inflationary policy by and government thereafter. Chart, tell the nice people what you have to say…
Graph showing the continuum with annotations highlighting shifts in bond market signaling and inflation policy.
Post-Volcker until 2022 it was the disinflation in the bond market’s signals that gave license to rancid inflationary policy. This is the worst of the phase that rigged “rich richer, poor poorer” into our now expiring system with the countdown figuratively, if not literally, beginning with the rebellion in Treasury yields 2022 (after other inflation indicators began to signal code red in 2021).
Rebellion you say? How about revolution? A revolution against debt leveraged for growth. A revolution for simply owning assets that are no one’s liability. A revolution for value and against greed. That, along with insurance and monetary safety, is what gold represents to me. Oh, there is also this…
Last Chance Power Drive For Stocks?
Technical ratio analysis, per this chart we’ve been reviewing in NFTRH, would indicate that the current recovery in stock prices vs. the gold price could be the last chance for stock market casino patrons to make a power drive into awareness about an asset of enduring value.
Chart illustrating the SPX to ratio from 1961 to 2025, highlighting key trends and potential investment opportunities between gold and stocks.
In my book, such a change in investor behavior would be a revolution against the system that symbolically expired in 2022 and in my opinion has an actual expiration date maybe not too far into the future. If the situation follows the 1970s playbook, a new inflation phase (likely subject to interim market liquidity problems) would see stocks basically going nowhere while gold continues upward.
Gold Is Simply Value
Meanwhile, the nominal gold price is heavily overbought, just as it was before the post-2020 correction. Just as it was prior to two correction/consolidation phases in the 2001-2011 bull market phase. It’s not going to always be a smooth ride. But gold has most definitely picked up on the post-2022 “new macro” theme and is “periscope up”, looking around to see what important roles it will play in these rough seas.
A financial chart displaying the price movements of gold over time, including key indicators such as pattern breakout support and target levels for potential growth.
I’ve always tried to think out of the box. But when the Continuum busted in 2022 I made it a priority to stay out of the box and try to anticipate what is ahead. I purposely under-performed the policy bubble beneficiary known as the U.S. stock market in the 2012-2022 period (with long periods of great out-performance circa 2002-2011). That is because I did not believe in it. I “played” it, staying out of its way (by not being bearish) and capitalizing with risk capital only.
Today, as signaled by another revolution (2022, in bonds), it is in my strong opinion a time to respect the value proposition of gold (written in 2007). I guess I’ve been a monetary revolutionary the whole time, because my views on the matter have not materially changed since that article was written. But the wider macro has.