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As a gold and silver bug (I prefer silver, TBH), it’s very alluring to look at the prices and point and constant manipulation to see that these assets are undervalued. However, if you really take a look at how all of this works, you might see that gold is overvalued relatively to real estate. Well, a specific type of real estate. Let’s look at the first chart here.

I think generally speaking, 99% of you don’t necessarily see how currency is created and then finds its way to the most efficient place to put it. You just see either “stonks go up” or “gold…good”!

In a “risk on” type of scenario, everyone is doing call options on tech. Buying bitcoin with spec investments to try and even afford an apartment. Perhaps they are then selling some stocks at 3x to buy a house. The house buying is then a “risk on” signal those like Michael Gayed use. But if housing starts slow, lumber falls in price – and this can be an indication that risk off is around the corner.

In a “risk off” type of scenario, perhaps a downturn of the economy is seen. What might start to happen here is that people sell stocks and lock in profits, then store that currency in either treasuries or gold to preserve the profits. As job losses mount, people are then selling houses, putting downward pressure on the real estate markets. In 2021, I had predicted that “who the hell is going to buy 3% treasuries at 9% inflation”. Some outsider idiot like me could see this – when I wrote in my piece “The pin that pops the everything bubble – takedown incoming”. Treasuries went on to have their worst year in 100 years, because the traditional thinking with “risk off” was to buy treasuries. Again, if you are at 9%, why the hell would I buy something for 3%. Seems like lunacy to guarantee a loss. But they all did it. I understand – they all have risk management and regulatory bodies that they answer to. If you manage someone’s money, you have to use the principals and guidelines given. You cannot just go out and buy some shitcoin. You need risk management protocols – and all of them said “buy bonds”. Well. Today you need to put your thinking cap on again. Take a walk with me.

A funny thing is happening, as we speak. Gold is at all time highs. Bitcoin is at all time highs. Stocks are at all time highs. And real estate is being snapped up at all time highs (in many specific areas only). To me, this is evidence of de-dollarization. What I “feel” is happening is that China and others are letting their treasuries mature, taking the cash back, then putting this into anything they can to get out of the dollar. Specifically, I feel the Chinese buying of gold and silver right now far above the Comex supports this narrative. India just removed the import tariffs on gold.

With the chart at the top, I started to track relative performance from 1968 or so – which is about the best I can do on data. What you see here is the blue dotted line (real estate housing price index), orange line is gold, turquoise as Dow, and yellow line as M2.

Capitalism is about efficiency. If you are charging someone $25 an hour to mow their lawn, someone can go talk to your customer and steal your business offering them $20 per hour. These are how business cycles tend to operate. “The solution to high prices….is high prices”. Now, assume for a minute this guy gets business at $20 per hour. He starts taking a lot of business from people. The issue then comes to be that gas prices go up, and he has a hard time finding labor as many are leaving the industry to work somewhere else for higher pay. “The solution to low prices…is low prices”. This guy either has to raise his prices or close shop. His service is unreliable, and the guy offering $25 per hour for reliable service starts winning jobs.

Currency finds its most efficient path. What sticks out on this chart is a few things:

1. Look how low gold was in 1998 compared to the other two asset classes. This is the dot com era, and all speculative cash exited gold to buy stocks.
2. Once the dot com bust happened, look at how the blue dotted line of real estate really took off, and look at gold’s ascent.
3. Look at how in 2011 gold went wayyyyy high.
4. Since 2018, everything has risen in tandem

If you look at the blue dotted line today, you see it is lower in relative performance than gold and stocks – using the Dow. I’m going to add the Nasdaq and S&P below in a bit. What most understand is that many in 2021 bought up houses at inflated prices with low interest rates to do AirBnB – and many of those may soon crash down. But these are pockets of the country with massively inflated prices – with the rest of the country not in a bubble. This had me buy a short term rental last week, far – far – far away from any kind of AirBnB bubble areas. I was wayyy overexposed in metals, and with the sale of one of my long term rentals in August, I wanted to pivot to a vacation home/AirBnB/rental to have a place to go in times of chaos.

But what you see with this is gold is performing at or above real estate and stocks. Can it balloon up like it did in 2011? YES! Will it? I don’t know. No one really does. However, if you were to claim “gold is undervalued”, you would have a hard time convincing me of that. Could it run to $2500 right now? Sure.

Many just simply do not grasp what a $5000 gold price means. That’s a 2.5x move from here. Everyone who is a gold bug sees this in a bubble. And what will happen from this, is anyone who owns gold will run out and sell it – depressing the price – and then buying up housing or stocks with the profits. Meaning, gold will be overvalued relative to the other asset classes. Personally, I’d pay down housing debt. But that could then free up more cash for me to spend into the real economy every month, like a stimulus on steroids for everyone. This again, will pump more cash into the economy and bid up services and goods.

Others have then told me I’m foolish because no one owns gold. This is gold bugs looking around and seeing one person in their entire 300 friend list of facebook that owns bullion. They don’t realize the level of gold that is owned by Americans in the form of jewelry. Let’s just say gold hits $5000 an oz overnight. This would be headlines everywhere. “Honey, what did you do with that 24k gold bracelet I bought for you 25 years ago when gold was $300?”

I would imagine that prices of everything come up to compensate. This is how this all works folks. Stocks run high, and they sell out of that to buy gold. Real estate prices go nuts? Boomers sell and put their profits in safe bonds, dividend stocks, and gold. Gold goes crazy? Debt paid off, more cash goes into the real economy from paychecks. Maybe a new house is built. Maybe you are ordering a new deck and contractors everywhere get busy from all the work and push up prices.

So no – I don’t see gold going to $5000 tomorrow. But see the BLACK dotted lines? That appears to be the rate of acceleration of M2 – which is correlated with the debt created.

Let’s now look at the Nasdaq, S&P 500, and silver added to this chart.

The purple and magenta at the bottom are the Nasdaq and S&P, respectively. Look at how they lagged. The dot com bubble didn’t do the Nasdaq any favors for a decade. But look at the recovery of the S&P after the GFC and what stimmies did. You can also see massive green spikes on here, which is the tiny silver market getting its squeeze on. Today, you can see the green squiggle as underperforming real estate as well. Can it moon much higher like in 2011? Very much so.

My bets here:

• Silver to at least catch up to the pack. That “catch up” is at $50, believe it or not. We see when it has played catch up before, it massively outperforms, then recedes hard as mines spin up more of the shiny and people cash in grandma’s candle sticks.
• Off the road real estate. Not Miami. Not Austin. There’s a lot of real estate in rural America that is beaten down. Drive the back roads of PA and you will find what I’m talking about. However, a lot of these houses are not catching up for a good reason. Lots of disrepair. THAT is what is holding the values down. Rural America has been left behind in these booms, and have not been able to pay for costly repairs. Those with means can find these gems, restore them, and make a boat load in rents or a flip – only at some future point when those areas get more attention. The smart money I believe is to find undervalued and beaten down properties on the outskirts of places that people would visit. It’s exactly what I just did. Now, I’m investing in restoring an 8 acre place that essentially needed new flooring and paint. In my searches, I found a LOT of these places.
• Gold may see $2300-2500, but I believe there’s some sideways/down move after that as I feel a deflationary shock will take a lot of this down. Does it take it down to silver, or does silver catch up and go further before that? I didn’t add bitcoin in here because I feel it’s a high speculative correlation to the Nasdaq and the Nasdaq offers a good proxy for the speculative unbacked digital tokens. My hope is gold hits $2500 and there’s a frenzy into the miners. I don’t know if that will happen before a deflationary shock, however.
• In the event of a deflationary shock, I feel the strongest performers will be gold and silver – as it appears de-dollarization is making these levitate higher, and a shock may just provide a lower price point for China and India to gobble up as much of this as they can – providing a floor, of sorts. I feel rural housing in the US will hold its value, as many want to seek out these properties to get out of cities and suburbs – and this can create a floor, with low inventory. I feel the worst performers in a deflationary shock will be the nasdaq, homes in inflated areas, and unbacked cryptos – as unemployment starts to rise anything not nailed down goes for sale. Tech stocks of those who are piling into NVDIA and Tesla and the like get sold. (insert shitcoin name here) is sold as they need to liquidate to pay bills. No one under 36 has any freaking clue how bad the GFC and dotcom were for people like me. You. Sell. Everything. These people are pretty clueless about the levels of desperation you run into and the high risk items they are in, and how that means in times of uncertainty, these things fall like rocks in an ocean.

I do see later in the 2020s that gold could go massively higher as the dollar is really moved away from by BRICS+ countries. Dollar bulls are only caring about the DXY, and seem to not grasp what happens when 50% of the world actively doesn’t want the dollar, defaults on dollar debt because they don’t give a shit, and everything the West buys is then priced in gold-backed BRICS+ currency. This supports a thesis where you could simultaneously have a DXY of 150, but a TV from a BRICS+ nation that costs $350 now could be $1800 in 10 years. Why? Because all anyone is looking at is the basked of the USD compared to the Yen, CAD, GBP, and EUR. This is goldfish thinking, and why the USD needs to start converting to gold, today. This is your wall of de-dollarization and super inflation to come.

And as much as I talk about it, I’m smirked at and no one seems to listen. I have been labeled as a “doomer”. Spend a year in grad school like I did studying emerging economies and BRICS+ and then tell me how good holding your dollar is. You start to understand the game you understood for the last 100 years is changing. The game is moving. Schmucks like you and me have a choice…

1. Get in gold and silver
2. Get into rural housing at extremely affordable prices
3. Get into undervalued, beaten down blue chips – whenever they have dips
4. Start to understand emerging markets better to invest internationally
5. Get everything you can out of the USD and into real things that are undervalued
6. If you speculate, speculate with limited risk, as you could get wiped out in a day if really bad things are coming.

Why? Because debt. Because every few months now we are adding $1T to our debt, and foreign nations who have bought our debt historically are shying away from it. No politician today can be elected talking about cutting costs – and now today it’s about handing out candy to those who voted for you. I am a fiscal conservative who leans HARD libertarian, and feel our government has lost its marbles with spending. All of our politicians are now cashing in with insider trading – LEGAL insider trading. They leave and get millions as a lobbyist. DC is now a bureaucratic swamp hole that is off the rails and nothing can stop it other than a rug pull and hard cuts everywhere in spending. Which puts millions and millions out of work.

Your next depression is when the checkbook stops funding the swamp. Either by political will or by forced budget cuts when no one buys our debt. We either have to but hard, or we turn into Japan for 30-40 years as more cans are kicked down the road and stagnation in the economy and job growth is then matched with higher and higher inflation as dollars hit our shore from abroad.

There’s a tidal wave coming, and hubris is their worst enemy. This can end in one of 50 ways. But the debt grenade pin was pulled, and now it’s just a matter of when.

So – $5000 gold is a certainty, at some future point when dollars start buying it up here – but many aren’t realizing dollars from abroad are what is driving it today.

First, there’s a cleansing. When that happens, I don’t know. But I know over a year ago Powell begged congress to rein in spending. He has been ignored. And when rates start climbing of debt, and we then have increasing costs to sustain this debt – we either debt spiral to hell, raise taxes to ungodly levels, or both. The debt would have to be bought by the Fed, and if Powell refuses, in comes Brainard for the MMT hell coming and the printing press then launches us to $50T in debt inside of 5 years.

THAT is how you get $5,000 gold. Powell doesn’t survive this. The swamp and debt loving machines are hungry, and he’s not willing to feed them. Powell, love him or hate him, is the Alamo of the last ditch defense to save our nation, as we know it.

Got gold? Got your doomsday place? You know, I would sound somewhat crazy IF and only IF they actually talked about cutting spending. They don’t, so I’m not.