Kaboom: Fireworks in America's Money System
Cutting loose the dollar from gold in 1971 has created a vast inflation in all asset prices over the last 50 years. And that deflating those assets will be extremely painful for more retirees.
Friday, July 4th, 2025
Laramie, Wyoming
By Dan Denning
Good news everybody!
The new Research Report I told you I was working on about a month ago–The Fourth Taking–is almost done. And yes, it’s a combination of The Great Taking by David Rogers Webb and The Fourth Turning by Neil Howe and William Strauss, but with my own take, and with a focus on money transitions.
Better news!
After discussions with Tom and Bill, we’ve decided to include a new investment recommendation in the report. We’re putting the final touches on it now and I hope to send it out to you over the weekend. Stay tuned, and thanks for your patience.
The investment recommendation is not a direct solution to the problems I’ve outlined. The problems are enormous. Late stage Empire fiscal and monetary policy has two destructive outcomes. First, the high probability of a crash in financial markets. Second, the destruction of savings and purchasing power through inflation (the result of rampant money printing and government deficits).
You’ve heard all that from me before so I’m not going to belabor the point on America’s birthday. But there is a silver lining, or a golden path, for your money. If we’re right about what’s going to happen in the second half of this year–with interest rates, the dollar, and deficits–now is a good time to add a new position to our strategy. You’ll learn what it is soon enough. In the meantime, a chart.
This is the gold/silver ratio. I agree with my precious metals mentor Rick Rule that the ratio–taken alone–doesn’t have a lot of informational content. That is, it’s explanatory while not being predictive. If we’re in a precious metals bull market (and there’s no doubt we are) where retail and institutional investors move into bullion and mining stocks in a fairly common pattern, the ratio gives a clue as to what might be coming next.
In this case, I’m looking at 65, the level the ratio hit in late February of 2022. At the time, gold was $1,789/oz (gold is up 87% since then). Silver was $27.35/oz (it’s up 36% since then). If silver went to $50/oz from here, and the gold/silver ratio declined to 65 again, gold would actually fall about $100, while silver would rise almost 40% from here.
There is no fixed mathematical relationship between the two that says this has to happen, or that predominantly silver mining stocks will go up some greater multiple of the rise. But keep in mind that gold was up 25% in the first half of the year while silver was up 24%. All while the US Dollar Index (DXY) fell 11%--and that was with US 10-year yields spending almost the entire year above 4% (US 10-year yields closed at 4.35% yesterday…in the developed world only New Zealand at 4.52% and the UK at 4.55% have higher 10-year yields).
My point, or really my question, is: What if US yields are high and rising because investors and creditors now understand there will be no spending cuts and deficit reduction in the Trump administration (more on this below)? Markets are ahead of pundits on this. But there are even bigger moves to come. See below.