Gold Nears $5,000

Everyone was wrong once again. From the big banks to even free market pundits, no one predicted the massive price increase of gold in so short a timeframe. Even after being disproven by gold’s rapid rise to 4000 just a few months ago, the mainstream narrative still stood that gold was slowing. Just as they did when gold reached 4000, everyone who underestimated gold failed to understand just how much the world had rearranged in the favor of gold’s value. Some people were predicting that gold could reach 5000 by the end of this year, yet it seems on track to do so months in advance. Gold’s out performance of expectations is almost expected at this point. Even with its repeated performance, people are able to remain skeptics because they misunderstand the factors that led to the price increase. Far from merely the result of speculative and retail investors, it is being driven high by much more stable and long-term factors. The evaluation of the dollar has always been, and will continue to be, the greatest driver of gold’s increase in use and price. The higher price of gold signifies a fundamental rearrangement of world power that is not necessarily harmful to the US, yet far different from the era before gold’s dominance and the breakdown of the order of the past decades. Consistent under-prediction of gold price shows areas of weakness in the ideological framework of even the most informed and powerful sources of information. Those who were once relegated to the role of “sound money lunatics” are now having the arguments against fiat currency write themselves.

While the true weakness of the dollar has been written about in libertarian and sound money spaces, both theoretically and practically for many years, the recent price growth of gold emphasizes that Western society in general does not understand how weak the dollar truly is. Rather than losing value and stabilizing, the recent loss of value has merely accelerated its collapse. Tariffs that only isolated the US for a few months created a permanent new order that allows the world to go on effectively without a need for as many dollars. This is an extremely positive development yet is very damaging for the value of the dollar. The volatility of trade policies and a loss of respect on the world stage have led to a mass exodus from use of the dollar. Other Fiat currencies are not particularly stable either, as people of all nations have accelerated their acquisition of gold. This effect will only accelerate as the dollar functions like a network good, and the incentives to dollars are diminished as less people around the world hold them. The intense increase in gold price was not predicted because the reality of the dollar’s devaluation and decrease in use is not fully understood. …