Central Banks Are Now Stackers

Oh, The Irony

For decades, those purchasing gold and silver products were ridiculed as “survivalists” and “preppers”. God forbid people trying to protect their savings. Measured from the beginning of the U.S. Federal Reserve, the day Nixon took us off the gold standard, or the year 2000, the purchasing power of currencies has basically gone to zero when measured by the individual unit. That is why prices have gone from millions, to billions, to trillions, and now quadrillions. No wheelbarrow for transporting currency as the Germans used during the Weimar Republic. Just more digits in a computer.

Let’s recap. The currency in your pocket is not money. In the United States, the Constitution defines money as gold and silver. Period. What you have in your pocket is a “Note”. Pull one out and look at it. It is a debt obligation backed by the “Full Faith And Credit” of the United States. That means you and me. Every one of them.

Same for the derivatives, assets derived from something else. A Treasury bill for example is nothing more than a bundle of Federal Reserve notes. True for all derivatives. Notes, bonds, mortgages, even shares in companies. All derived from some underlying asset collateralized and priced in somebody else’s collective “guarantee”.

Central banks create these notes out of nothing. They then have the gall to charge interest on this nothingness. As we learned during the D.O.G.E. episode, they discovered 14 “Magic Money Machines”, computers at the Fed that could create currency in unlimited amounts for anyone determined by the Fed as “worthy”.

When you really think about it, this is the ultimate in taxation without representation. The “Power of the Purse” Constitutionally designed into the U.S. government charter is completely irrelevant. Secretive people and organizations have the power to obligate the population. There is no need to take the money through taxation. Just create more I.O.U.s., literally enslaving the population and future generations. Pretty evil.

It is no accident that $21 trillion is missing from the coffers of the U.S. government. It was stolen.

The currency in your pocket and represented by digits in a computer is credit. J.P. Morgan nailed it. He famously said “Gold is money, everything else is credit”. Credit is a good thing. The world could not function without it, and that has been the case forever. No credit, and we’re back to bartering.

That is a world to which we do not want to return.

In a world of barter, goods and services are exchanged real time. If I farm potatoes, and someone else wants to sell tomatoes, the amounts of potatoes and tomatoes are never going to balance out real time. The produce is also perishable. So how can a massive, complicated economy function? The answer is credit. For most of us, that means currency in some form.

Currency represents an unfinished transaction. If I can’t find anything to buy, I can accumulate currency as unfinished transactions. I can complete the transactions by purchasing another good or service now or in the future. For that to happen, the underlying collateral (“Full Faith And Credit”) must be reliable. That means the creation of the credit must be proportional to the earning potential of the guarantors (that would be us), and the underlying assets as well (that would be the physical assets of the U.S.).

We are way over our skis on both. That is why there has not been a balanced budget for as long as anyone can remember. That is why tokenization of the assets of the U.S. is on the table. Basically, selling the family jewels. They meant it when they said “You will own nothing, and be happy”).

Back to stacking. The powers that be know that the fiat currency scheme is on its last legs. Instead of demonizing gold, silver, and stackers, the central banks and governments of the world have flipped the script and are actively scooping up metals of any kind, particularly gold.

For gold, they are using it to collateralize their own currencies for one. We are returning to the way it used to be in the U.S. Before the Federal Reserve and Congress ruined the value of the currency, you could exchange it (silver certificates) for physical silver at your local bank. Few people did as silver is heavy. The paper spent just as easily as the silver, and was much more convenient. By proxy, exchanging a silver certificate for goods and services represented completed transactions.

For a long time, those in the “stacker” world were advised to become your own central bank. Excess currency was to be converted into physical assets such as gold, silver. Not exclusively. Warren Buffett correctly realized that owning productive real assets was better than owning gold and silver.

That is still true. While the stock and bond markets are grotesquely overvalued by historical standards, there are non-”Mag 7” companies still representing good value. Debt obligations such as bonds are going to be capital destroyers. Karma has finally caught up with the Japanese bond market. It is currently in the process of melting down. If it continues on the current path, it will bring down global finance.

So now the central banks are in sync with the “conspiracy theorists”. The irony is that they are using their magic money computers to buy resources, gold, silver, copper, uranium, etc. They really don’t care what price is paid. It’s funny money. Instead of one central bank, countries are doing what the stackers have known for a long time. Be your own central bank.

While the news has focused on gold and silver, we are now in an existential war for resources. “Metal wars” as coined by Vince Lanci. In investing, distinguishing between value and price is crucial. The world has awoken to the realization that metals and other resources are not “nice to have”, but are critical to have.

Until the funny money scheme is universally acknowledged, countries that can print will do so in unlimited quantities to acquire those resources. Prices paid for those resources have nowhere to go but up. They don’t care what they have to pay.

For investors, this is a once in a lifetime chance to create generational wealth. It is not just gold and silver. That is the foundation. In addition to all of the strategic resources, the elephant in the room is oil. There is no more politically sensitive resource than oil. If the price of oil rises, so do prices for just about everything else. Governments will do everything to suppress it.

However, oil is stirring. The beauty of it for long-term holders is that you can find high quality companies paying significant, secure dividends while waiting for the price of oil itself to rise. Oil has been called the most undervalued asset. It has been for some time, but it looks like that is about to change.

A final note. To the central banks from the original stackers, welcome aboard. Print away. We thank you.