Month: March 2020

Financial Times/Robin Harding, Brendan Greeley, and Martin Arnold/3-6-2020

“As well as its consequences for public health, therefore, coronavirus may mark a watershed for economic policy. After almost half a century when central bankers were the heroes, and monetary policy was the main tool for managing demand, they are actively calling for the use of fiscal policy instead.”

USAGOLD note:  Coronavirus or not, the central banks threw up their hands a long time ago and started putting pressure on governments to use fiscal policy as a means to juicing up the economy.  The problem is that it takes a long time for governments to act  – if they act at all.  In the meanwhile, the economy continues to grind lower and financial markets continue to face growing threats to their stability.  This Financial Times article ends on a less than hopeful note.

Mining Weekly/Marleny Arnoldi/3-5-2020

“The ongoing and expanding US sanctions on Russia are expected to paradoxically support gold production in Russia in the short term, says Fitch, adding that the rising risk of Russian State banks being frozen out of dealing in dollar-denominated assets altogether, as bilateral relations remain strained, is pushing the Russian central bank to increase its holdings of gold.”

USAGOLD note:  In short, even as Russia rises to the top, most of its production will be kept within its borders as a monetary reserve asset. With the gold price rising consistently over the past few years, this strategy has proven to be a successful one for Russia’s central bank and its national balance sheet.

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A chronology of panics, mania, crashes and collapses
(400 BC to present)

“You say: ‘I did not think it would happen.’ Do you think there is anything that will not happen, when you know that it is possible to happen, when you see that it has already happened?” – Seneca, 62 AD

This chronology was compiled as an accompaniment to my short study on the four most commonly predicted worst-case economic scenarios – Black Swans, Yellow Gold: How gold performs during periods of deflation, chronic disinflation, runaway stagflation and hyperinflation. My original intent was to make a short list that would illustrate the frequency with which periods of economic breakdown made their appearance in the historical record. Little did I know how extensive a project it would become. So much so, that it became worthy, as you can see, of its own web page.

Panics, mania, crashes and collapses, as it turns out, are as common to financial history as thunderstorms to placid summer afternoons. They tend to show up suddenly, wreak more than their fair share of havoc, and recede into the history books only after endless discussion of their causes and cures. Whether brought on by popular delusion, unscrupulous market operators, misguided governments and/or central banks or some random, unforeseen shock, black swan events are part and parcel of the human experience and just as permanent a fixture in our collective history as wars and natural disasters.

Those who think it can’t happen here, or that this time around it’s different, should take note of the number of black swan events in American history alone. The record is formidable. Gold ownership is traditionally a form of battening down the hatches against these recurring storms and, for the minority who adhere to it, an effective and ever-ready defense. Nialls Ferguson, the economic philosopher, summed up what a good many were thinking in the wake of the 2008 meltdown when he said, “Those few goldbugs who always doubted the soundness of fiat money — paper currency without a metal anchor — have in large measure been vindicated. But why were the rest of us so blinded by money illusion?” Why indeed……

– Michael J. Kosares

[LINK to full chronology]

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