Savings

     The rapid increases in the dollar prices of precious metals are alarming for more than one reason.

     Yes, I’m alarmed. Even though I hold large quantities of the money metals, what’s happening has me frightened. The dollar prices of the money metals don’t say that gold and silver are getting more valuable. Rather, they say that a large number of people are worried about the future of the U.S. dollar and the American economy generally.

     You can’t pay for your groceries with gold or silver, just yet; you still need dollars for that. The metals are hedges against further declines in the purchasing power of the dollar. They’re something else, as well.

     Among the reasons gold and silver served as Mankind’s currencies for so long is that they’re easy to recognize. Yes, it’s possible to make fake gold coins by plating tungsten slugs with a thin covering of gold, but such fakes are detectable by simple tests. It’s harder to fake silver coins at a profit, though should silver continue to rise in dollar price, that might not remain true. So gold and silver make trustworthy currencies as well as reliable stores of purchasing power.

     Gold and silver in private hands represent purchasing power no government can control. They make possible both completely private transactions and completely private savings.

     States don’t like for private persons to have private savings. That’s one of the motivations behind the worldwide drive for Central Bank Digital Currencies (CBDCs). The State wants to know everything: who has what, in what forms, and what he’s doing with it. Over time, a CBDC decreed to be legal tender would allow the State to eliminate its physical cash – those Federal Reserve Notes in your wallet – and make all “above-ground” transactions vulnerable to State monitoring and control.

     Gold and silver are the State’s enemies. As long as there are reserves of those metals in private hands, there will remain an underground economy that’s proof against State intrusion. Worse – from the State’s point of view – those reserves could power a revolution. Their very existence would force a degree of moderation upon the State. Even the idea of that makes the masters of the State uneasy and sullen.

     You and I, Gentle Reader, aren’t the only ones watching the prices of the metals. The masters of the State are watching them too. And they’re as alarmed as I am. Their best hope for total and irreversible control over all human enterprise is being threatened by the rising consciousness of private persons that the State’s “money” is merely wastepaper.

     When the masters of the State feel threatened, they tend to do alarming things. They pass insane laws. They stifle private communications. Sometimes they go to war, to create a pretext for “emergency measures.”

     The Year of Our Lord 2025 was an interesting year. One thing many hoped for was an immediate, sharp decrease in the cost of living. That hasn’t arrived, though some commodities have dropped in dollar price. The new tariffs intended to rebalance America’s international trade, bring expatriated industries home, and garner new federal revenue have pushed the prices of imported goods upward. A lot of people who supported President Trump have begun to wonder if he can deliver… or intends to.

     Americans need reasons to believe in America’s future. Failing that, they’ll use whatever private measures promise protection for their resources. That’s clearly expressed by the prices of silver and gold and the expanding interest in the cryptocurrencies… and the State could shut down all traffic in the cryptos by throwing a switch.

     Verbum sat sapienti. For those interested in a fuller exploration of methods for financial self-protection, please read John Pugsley’s classic The Alpha Strategy.