Gold, Silver & Bitcoin Jump on Failing ‘Money’

The old and the new forms of real money both surged over the weekend on the back of a host of catalysts.  

Gold jumped $20.48 (1.21%) and silver 30c (1.32%) Friday night, taking both comfortably over their 200 day moving average.  That was the biggest jump in 3 months and putting gold very close to the magic US$1300 again.

But on the back of firstly Venezuela’s PDVSA defaulting (previously discussed here), and then Mugabe’s resignation backflip this morning in Zimbabwe we saw bitcoin sore above US$8000 for the first time.

But if you think US$8000 is impressive, consider that in Zimbabwe it traded at nearly US$13,500 as locals piled in trying to preserve their money in the troubled nation.  Bitcoin gives them the double benefit of being impossible to confiscate and easy to move offshore.

Throughout history gold and silver have played the role of real money as fiat currencies collapse, just as we are witnessing right now in Venezuela and Zimbabwe.  Bitcoin is now joining those ranks, adding fuel to an already hot market.

Visitors to our office will have seen one of our $50million or $100trillion Zimbabwe notes.  Both are essentially worthless, such was the hyperinflation in Zimbabwe.  Venezuela too is experiencing something like 2400% inflation right now.

Is it any wonder people flock to real money?  Is it any wonder we discount the concern that gold and silver don’t offer a ‘yield’?  Monetary assets are all about preserving your wealth as fiat depreciates every day and inflated financial markets crash.  The world has just experienced (and still is) historically unprecedented money printing through quantitative easing.  To date that hasn’t played out in the normal general inflation expected of such stimulus.  What it has done is inflated financial assets to record highs.  The big questions are when will that bubble pop and when will that general inflation be unleashed?  Gold loves either scenario….

But we are in ‘the lucky country’ right?  Such currency craziness could never happen here….  We’ll discuss that more tomorrow….