This article was written by Brandon Smith and originally published at Birch Gold Group
In early 2020 at the beginning of the pandemic hysteria I noted that the covid panic seemed to perfectly coincide with the Federal Reserve’s acceleration of interest rates and and asset dumping. This trend, I argued, was a precursor to a Catch-22 scenario I have been warning about for some time.
Since the crash of 2008, the central bank has used stimulus measures and near-zero interest rates to protect “too big to fail” corporations while keeping debt structures afloat globally. Doing this required the digital printing of tens of trillions of fiat dollars and, inevitably, a sharp devaluation in the Greenback.
I predicted that this would lead to stagflationary conditions (which finally hit in 2022), and the conundrum of inflation vs. deflation. The Federal Reserve could continue to keep rates low and ignore inflationary pressures in order to avoid a debt implosion. Or, they could significantly raise interest rates, let the debt system take a tumble (and take its medicine), and squelch the effects of inflation by suppressing consumer demand.
Either choice could cause an economic crisis. The Fed decided not to choose. Instead, they raised rates but not enough to reverse stagflation effects. They took the middle road and refused to allow the economy to take its medicine.
This means we are still stuck with the massive price increases we incurred during the Biden Administration. CPI has stopped its dramatic climb, but most of our necessities remain overpriced compared to five years ago.
In 2020 I wrote an article titled “Physical Gold Will Soon Break Free from the Paper Market in Spectacular Fashion”, predicting skyrocketing precious metals values once this Catch-22 situation became apparent to investors. I predicted that buyers would increasingly drop paper ETFs in favor of physical delivery of gold and silver, causing physical to go parabolic. This is now happening.
Since I wrote that article, gold values per ounce have jumped over 200% and silver prices have exploded by 400%.
Global inventories of physical metals have plunged. London vaults are reportedly down 30% since 2022. Refiners report 10-14 week delays for new bars (vs. normal 2-4 weeks). Physical redemptions of paper ETFs have accelerated.
Silver has crossed the $90 per ounce mark as I write this, and gold is closing in on $4700 per ounce. It would seem that the suppression mechanisms are breaking, or, large banks like JP Morgan are deliberately backing away from paper market manipulation for some reason. Numerous central banks have elevated their stockpiling of metals since 2024, even more so that they have been doing in the past 10 years.
It seems to me that we are witnessing an economic singularity – A great moment of change. Or, at the very least, the warning signs of a change that is on the verge of surfacing. Precious metals are trying to tell us something.
The problem is, the singularity is mostly being ignored, even by more conservative platforms. Not enough people are talking about what’s happening with metals and what it means for the economy as a whole.
First, the rush to physical assets suggests that banking institutions, governments and 1% investors are scrambling to hedge in preparation for a crisis. As I noted in 2020, when the banks start rushing to buy gold and silver, then the average person should do the same. They are likely acting to mitigate financial losses in other areas, or they are expecting some kind of geopolitical earthquake that will spike prices.
It’s not hard to see the potential for global tensions right now. European governments have been growing hostile to individual liberties, cracking down on their own citizens for free speech. They have also become hostile to the US due to tariffs. They are protecting third world migrants over the rights of native Europeans. They keep trying to start WWIII with Russia and they prefer to take an aggressive posture against the Trump Administration rather than cutting a deal on Greenland.
It’s clear that the US and Europe have nothing in common anymore in terms of governance, though I would argue that most Europeans would probably celebrate if the US marched in and liberating them from their leftist authoritarian leaders.
Then there’s the domestic problems caused by globalist NGOs and the far-left activists they are paying to disrupt immigration enforcement. The deportation issue is merely a convenient excuse for wider conflict. If ICE agents went home tomorrow and stopped their arrests, the political left would find something else to riot about.
Just as we witnessed in 2020, domestic chaos is a tool for extortion of the target society. Activists and NGOs are saying: “Just give us what we want and we’ll make the pain go away…”
In the meantime, civil instability helps fuel the rise in metals.
Then there’s the tensions with Russia and China, who are not happy at all with the capture of communist dictator Nicolas Maduro. Venezuela’s oil exports have been a key resource feeding the industrial capacity of China. Though Venezuela’s supplies only made up around 4.5% of China’s imports, a loss of 4% or more in a volatile global market could be detrimental.
Venezuela has also been used by China and Russia as a launching point for military assets in the western hemisphere (including surveillance systems to watch the US). Chinese and Russian weapons systems seem to have failed miserably against US operations, which might lead to more hostile rhetoric going forward.
The effects of Maduro’s removal can’t be quantified yet, but they will be consequential well beyond what the public is told in the mainstream media.
The majority of Venezuelan people seem overjoyed by Trump’s actions; the question is, can we avoid a long term quagmire? The US is great at blowing up enemies with precision, but we really suck when it comes to military occupation. As long as the Venezuelans are largely in support of regime change and there’s no risk to US lives, then nothing else matters.
And let’s not forget about the protests in Iran and the potential for regime change in that region. I have no personal stake in terms of what happens in the Middle East. I think the US should stay out of the mess as much as possible but I have no illusions that Trump is going to quietly sit back and do nothing.
I have to admit, his decisions on foreign policy have been surprisingly effective and welcomed by the populations involved in most cases. That said, when geopolitical conditions shift so quickly this naturally sends shockwaves though the economy, even when the shift is morally correct and strategically necessary.
Finally, the Fed appears intent on cutting rates without ever actually fixing the original stagflationary problem. Consumer spending never went down. Debt accumulation continues to grow. Prices are still high on most goods compared to pre-covid. The US has to suffer through at least a short term deflationary event in order to correct for stagflation, and the banks have done everything in their power to avoid this.
In other words, if the Fed continues to cut rates then inflation will a comeback in 2026.
I believe all the right factors are in play for a continued gold and silver run. I would not be surprised to see silver close to the $200 per ounce mark by 2027. I predict that the silver to gold ratio will improve to levels last seen during the spike of 2011 (a 35:1 ratio), which would put the price closer to $131 per ounce in today’s market.
I’m not seeing any indication that global pressures are going to slow down anytime soon. In fact, I think precious metals are telling us that things are about to get much more chaotic.
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