In today’s Issue:

  • Why the gold price is surging
  • Governments need to control the printing press to stay afloat
  • How to profit from dovecote parliaments

The gold price is going bonkers. Up almost 50% this year. How can an inanimate object with no yield surpass stocks, bonds and bitcoin?

It’s not like gold struggled or was cheap last year. Heck, it’s outperformed the S&P500 over the past 25 years! Now the price is going parabolic on top of that.

But why?

The answer is fairly simple…

The gold price is warning you that something bad is about to happen. The question is what.

Now that is a more difficult question to answer. And not just because nobody can agree on what is “bad” anymore.

I suspect gold is worried that governments are going to try and take over the printing press. And we all know what happens when governments can print their own money…

The pandemic inflation was just the beginning

During the pandemic, government spending went bananas while the economy crashed. Central banks like the Bank of England printed up the difference. The flood of new money offset the implosion during the pandemic. But as things normalised, central banks forgot to normalise their monetary policy. And so, we got inflation.

What did we learn from the experience?

You might think we learned not to do it again. But politicians learned precisely the opposite lesson. They discovered what’s possible…in an emergency.

Given a bad enough financial situation, money printing to finance government is now permissible. And so, we’ve had a steady stream of such financial pressures since…

Liz Truss’s bond market turbulence. Labour’s budget black hole. Soaring interest rates in the US. France’s bond market wobbling. Japan’s bond market freezing up. And so on and so forth…

The point is that there is now an explicit guarantor of government debt…as long as there’s a crisis to justify it. Then central bankers can print the money needed to keep the government afloat.

This radically reshapes the world by creating a new set of incentives. It’s like the rules of a board game have been changed halfway through.

Have you updated how you play the game, investors?

How to spend your way out of debt

In the past, it was fashionable for politicians to at least sound reasonably austere. To warn about too much government borrowing.

But now, the worse your finances are, the more help you get from your central bank. And so politicians are increasing spending! Deficits are blowing out badly.

The most obvious example is President Donald Trump. He needs the central bank to back his vast and growing deficits. But he knows that America’s central bankers don’t like him. And so he attempted to stage a coup at the central bank a few months ago. But attempting to fire Federal Reserve chair Jerome Powell didn’t go well.

And so Trump tried to stack the rest of the Fed board against Powell. Trump appointed a loyalist to a vacant position and tried to fire an opponent from the board. If Lisa Cook goes, a second loyalist would tip the board in Trump’s favour.

Why all the shenanigans? Because the Fed controls interest rates and can buy or sell government bonds. This means it funds the government.

Governments rely on the printing press already

During an era when government debt is not a problem, central banks buying and selling government bonds is presumed to have no impact on the cost of politicians’ deficits. Central bankers can pretend their monetary policy is about inflation, not funding the government.

During eras when government debt is dangerously high and inflation is rising, the exact same policy action suddenly looks a bit suspicious…

And so back to our list of politicians trying to take over the money supply.

Japan just chose its first female leader of the ruling LDP party. Which makes her the presumptive first female Prime Minister.

She may claim to idolise Margaret Thatcher. But her political policies are very different indeed. She’s a fiscal expansionist, interventionist and believes yet another stimulus will finally drag Japan out of its malaise. That means more deficits and more debt.

Here in Japan, not a day goes by without me seeing a shop sign apologising for price increases. And I can’t even read!

At some point, the Bank of Japan will have to choose between its inflation target and funding the government. I know which one they’ll choose.

In the UK, the Bank of England was able to fire a government by refusing to intervene in the bond market for five days. It then supported governments by slowing down the pace at which it sold bonds at. This proved just how influential central bankers are.

Reform UK know this. Nigel Farage even threatened action against the Bank of England in my interview with him.

The French are in need of a bailout from the European Central Bank. But after bleeding Southern Europe dry of its pensions after the 2008 financial crisis, do you think Southern Europe will let France off lightly? Will the French put up with Germans and Greeks telling them how big their pensions should be?

European Central Bank president Christine Lagarde’s term is up in 2027. How many right-wing governments will she face at the European Council? And how many eurosceptic politicians at the European Parliament? They won’t appreciate having a central banker telling them how much they can borrow to fund their deficits.

But they’ll learn the hard way, too. Unless they take action.

Dovecote governments

Central bankers are often divided into hawks and doves. The hawks are hawkish, meaning they favour tight monetary policy at risk of creating unemployment. The doves favour the stimulus of loose monetary policy at risk of creating inflation.

But there are no hawkish prime ministers. All politicians favour inflating away debt. It allows them to reduce the debt to GDP ratio and spend money.

The inflation that results can be blamed on someone else. Foreigners, speculators, supply chain chaos and greed. Anyone but the printing press.

If governments are trying to commandeer the printing presses, we know they’ll create too much money to pay for their mad schemes. That means inflation. And it explains why the gold price is soaring.

If investors are anticipating an era of political influence on the money supply, a much higher allocation to gold makes sense. And so, they’re buying, in droves.

But there is a far more profitable way to play what’s coming. A “Wealth Window” opened up by the excuse politicians will use to launch their takeover of the printing press in the UK.

Until next time,


Nick Hubble
Editor at Large

P.S. The gold price is just the warning signal. The real opportunity lies in what it’s warning about. If governments here in the UK (and abroad) are preparing to take control of the printing press again, you can bet they’ll need a good excuse to do it. When that excuse arrives, a rare “Wealth Window” will open — one that could reward prepared investors handsomely. Click here to see what’s coming next.