Gold At $3500/OZ?!

It appears the pandemic is over, inflation is under control, and the Fed is lowering interest rates in anticipation of a soft landing. Since all the past worrying has amounted to nothing, why worry about how to pay off our nearly $40 trillion national debt since the punchbowl has not been removed and the party is still going strong?

I remember an analyst's projection of Dow at 30,000 was laughed off as “an optimistic fantasy in our lifetime.” Today, the Dow Jones is comfortably north of 40,000. I also remember August 15, 1971, when President Richard Nixon decoupled the U.S. Dollar from its gold backing at $35/oz, and have watched the price of gold rise to nearly $2700/oz today. Given that the price of gold is a barometer of the dollar’s strength, is it crazy to think that next year, an ounce of it will be valued at $3500, which will be 100X higher than in 1971?

Finally, a decade ago, I learned on a visit with my daughter’s family that they had invested in Bitcoin at $20 each. Not understanding what it was, I strongly advised them to dump it. Today, Bitcoin trades north of $60,000. Who knew?!

Like blind men touching an elephant striving to determine what it is, City Club has recently hosted many gatherings and discussions on historical cycles, economic trends, inflation, asset values, cryptocurrencies, stablecoins, the meaning of a debt jubilee, and how the next one will manifest.

Given that the only constant is change, revolutions and historical cycles are the norm, not the exception. Historically, eighty-year cycles are marked by war and technological advancement, with a disproportionate number of educated people unable to find jobs.

Now, look at all the dynamics at play today – the current high price of gold, the wars raging in Ukraine and Israel, Artificial Intelligence and Quantum computing, and a disproportionate number of college graduates finding themselves working as baristas at Starbucks – and ask yourself whether or not we are at the end of an eighty-year cycle and the start of a new one.

Let us hope humanity is spiraling up in a virtuous cycle rather than trapped in a vicious one.

— Sina.