Gold Surges As Central Banks Brace For Global Debt Storm

Gold Surges As Central Banks Brace For Global Debt Storm Submitted By Thomas Kolbe The gold price is racing from one all-time high to the next. That’s good news for friends of the precious metal and bad news for anyone still hoping for a stabilization of global debt dynamics. Assuming the markets close out the year without major volatility, gold holders can look forward to an approximate 70 percent increase in value within a single year. This is remarkable-not least because 2024 already ended with a 26 percent gain for the otherwise conservative asset class of precious metals. That amounts to a doubling of value in just two years-a surge usually seen in the tech sector rather than gold. A Store of Value in Turbulent Times For the most stable money humanity has ever known, which has served as a store of value in crises for millennia, this is no ordinary development. Quite the opposite. Among those who follow geopolitical developments and financial markets closely, such a compressed upward movement is an unmistakable signal: Danger is imminent. Whether it’s military conflicts-like the Ukraine crisis, which still carries dangerous escalation potential-or the global debt dynamics now affecting nearly every region, capital is visibly fleeing to the safe haven of gold. Gold has a key advantage over other assets: there is no counterparty risk. Physical ownership-not as an ETF held at a bank-represents a tangible value that, aside from the annual 1.6 percent mining increase, neither inflates nor can be arbitrarily frozen. By comparison, the M2 money supply-which includes cash, deposits, short-term term deposits such as money market funds, and savings accounts-is expected to grow by seven to nine percent globally this year. Gold is becoming scarcer relative to circulating fiat money-a compelling argument, particularly in central bank circles. Banks are well aware that their interest rate policies, coupled with ongoing debt monetization, lead to planned currency devaluation. Hence, the precise move into gold-central bankers are essentially trying to secure themselves. The size of the global gold stock is limited and fairly precisely measurable. Worldwide, there are 216,000 tons of gold, equating to a volume of 11,200 m3-forming a cube with a side length of 22.3 meters. Central Banks Scent Their Own Crisis Globally, it was again the central banks pushing gold prices higher this year. The Polish, Chinese, and Turkish central banks stand out. Combined, central banks are expected to add roughly 1,000 tons of gold to their vaults this year-a figure well above the long-term average of 400-500 tons. As mentioned: danger is imminent. This massive buying suggests that central bankers know full well we are facing a global debt problem-or may already be in the eye of the storm. Interest rates are rising in almost every economy, prompting investors to demand higher risk premiums on sovereign bonds from highly indebted states. The U.S., with over 120 percent debt, joins France (~117 percent) and Italy (~136 percent). Even Germany, currently an exception at 65 percent debt, plans a significant buildup...

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