Many people wonder what the future holds for gold in the face of military conflicts and central bank decisions. Here is an example of possible scenarios.
Q: Thank you very much for your excellent service. Here are some points I would like to offer for your reflections:
1. There is talk of the US government (and this would lead other governments to follow) to move to a central bank digital currency (CBDC). This would potentially be the end of cryptos in the private sector. The crypto would be transferable at a given price and time for the CBDC. Like what FDR did with gold in 1933. After conversion, cryptos would be banned. Would this event or the rumor/threat of this action push people back into precious metals? How do you see this scenario unfolding?
2. How do you think precious metals will react to a long war in Ukraine/Europe (which could potentially turn into WW3 after 2026)?
3. How do you see Russia and China moving away from the SWIFT system affecting precious metals? (China and Russia are accelerating efforts to switch to a new system in light of recent Russian bans.)
A thank you. Here is my point of view:
1. Well, even though I don’t like to write it, I consider the above scenario to be probable. Cryptocurrencies pose a direct threat to the monetary system and the power it grants to those who control it. Why wasn’t it banned then? Because even if it is popular, it could be widely adopted and then the monetary authorities could move on to government cryptos that only they control.
Theoretically, there are many positives to a system where money is “smart” and “customizable”. For example, money provided as social support can be used for most products, but not for alcohol or other similar substances. Supporting a specific area could be facilitated. Simply put, the money spent there would be worth 30% more than elsewhere, so people would flock to take advantage of the opportunity, supporting the region they were meant to support. For example, in the event of a natural disaster, it would help the region recover.
However, there are also myriads of things that can go wrong with this system. You didn’t like my party’s story before the elections? Swoosh!, throw the magic money wand and your money is only worth 70% of what it was before. “Hey, my company money should be worth more, because we’re so cool, and besides, listen, here’s a bribe.”
Would you rather own this smart money Where old mute and that no one can change? Personally, I would opt for both, but it would be more important to me than before to have a larger portion of my assets in physical gold and silver than before. Just in case someone with monetary power doesn’t like what I do, write or think. Remember that those in power can change, so even being a totally law-abiding citizen, who knows what the next government would think…
So, I think ultimately it will push up precious metal prices, but, of course, that’s something I see happening in the coming years, not the next few weeks.
Who knows, maybe the global rise in interest rates (which is just beginning) is meant to make people dislike the current monetary system, so they not only agree with the new cryptography system, but that they ask for it. Remember people shouting “Lock us up! Lock us up!” at the start of the pandemic?
2. Moving into a WW3 would like[ly] skyrocket the precious metals sector (especially gold). However, I think a stock market downside induced decline awaits us first – in the following weeks/months.
3. My answer here is exactly the same as when . To know:
“It might work as you wrote above, but…history tells us it probably wouldn’t. initially. Remember 2008? We had an international banking crisis (that doesn’t quite express what it was, but it’s a good summary), so the contagion effect was at its height, and what was the did? It first fell significantly, along with the general stock market, then came back with a vengeance. While gold was down, silver and mining stocks were also down, particularly significantly. This aligns perfectly with what I expect to see in the future of the precious metals market.”