As gold teeters along key resistance levels, with silver echoing its precious counterpart’s cautious dance, one must recognize the forces at play beneath the visage of market indices, seeming prosperity, and the policies of central banks. Austrian Economics has been the Oracle of financial systems for years, prophesizing the pitfalls of unchecked expansionism, be it in currency or credit markets.

The gold market has shown us that, despite recent pullbacks, the overarching trajectory seems poised for upward movement, particularly as it consolidates above support levels. Silver, disparaged as the poor man’s gold, has intriguing fundamental dynamics due to its dual role as an industrial and monetary metal. This apparent market stability, however, rests upon a bedrock of escalating debt and currency debasement.

The American debt saga continues unabated, a fiscal albatross that threatens to plunge the US and Western financial systems into a morass of insolvency and systemic risk. With each passing day, the government bolsters this precarious edifice with deficit financing, a strategy historically antithetic to the tenets of Austrian Economics.

In the past, the Federal Reserve might have embarked on reparative cut rates to salvage the situation, which historically accompanied a surge in gold prices. However, whether this pattern holds in a landscape scarred by trade disputes, geopolitical uncertainties, and the ravages of a global pandemic is uncertain. Against this backdrop, forecasting the price of gold is to chart the vicissitudes of trust in our monetary institutions and the dollar’s trajectory.

Note mining companies are beginning to repurchase their shares, indicating that gold will soon become more valuable. According to Jorge A. Ganoza, Chief Executive Officer of Fortuna, “With record earnings in the third quarter, and strong free cash flow generation supported by historically high gold prices, Fortuna is positioned to return capital to its shareholders.” Mr. Ganoza continued, “Our capital priorities moving forward will be to continue to balance returns to shareholders with advancing high-value opportunities in our portfolio.” – source

In the short term, gold may navigate choppy waters, influenced in no small part by the recent US elections and forthcoming policy announcements. Yet, given central bank policies worldwide and the United States’ proclivity for debt monetization, gold’s allure will increase as a hedge against inflation and currency devaluation.

Long-term, as the plague of debt reach unsustainable lengths, it is conceivable that, much like during the Great Recession, investors will flock to gold as a safeguard against currency turmoil and equity market volatility. Extrapolating from the writings of Hayek and Mises, it seems inevitable that as governments continue to inflate money supplies, precious metals will reaffirm their status as veritable stores of value in an otherwise relativistic financial domain.

While governments, working for the interests of the so-called ‘Globalists‘, continue to destroy the purchasing power of the US dollar, Americans are increasingly going further into debt, record debt, just to maintain their existing lifestyles. American households carry a total of $17.943 trillion in debt as of Q3 2024, with mortgages making up 70% of this amount. The problem is now worsening for those with credit card debt: Credit card and auto loan delinquency rates have increased since 2022, reaching levels not seen since the 2008 recession. – source

Turning to commodities, they must be viewed through the Austrian lens of supply constraints and policy distortions. Energy markets, for instance, appear to be on the precipice of correction, as they grapple with the realities of an economy that demands energy independence while being shackled by the chains of interventionist strategies.

The specter of debt, rising inflation, and artificially low interest rates concoct a noxious brew that threatens to corrode the very foundations of our market economy. The solutions proffered within the Austrian economic framework—implementing sound money principles and curtailing the growth of public and private debt—remain as pertinent as they are perennially disregarded.

Austrian School protagonists extolled the virtues of competitive currencies, which in today’s context presses for a return to physical precious metals or even cryptocurrencies as viable alternative monetary systems to fiat currency monopolies.

Predictions, therefore, skew towards caution in the face of escalating monetary and fiscal imprudence. As the current trends continue, we will witness a decoupling—precious metals rising as fiat currencies dilute their efficacy amidst sovereign debt crises and inflationary pressures. The equity markets, shouldered by speculators rather than investors, can expect a correction aligned with historical price-to-earnings ratios once the tide of easy money recedes.

Note on CryptoCurrencies. Cryptos are in an explosive growth environment. Billions of nearly created money is flowing into the crypto space and with Trump (who previously hated cryptos) now stating the United States will be the crypto capital of the world, we can expect this trend to continue for a period of time. Remembering that inflation is the cause of growth in prices for commodities, the rise in stock prices, and, by induction, the price of cryptos — it is imperative to monitor the debt market for signs of imminent collapse to secure any gains made during this period of hyperinflation.

In conclusion, the present socio-economic dynamics necessitate a reevaluation of fundamental values and principles. The only road to sustainable growth, which governments have no intention of traveling, mandates embracing the hard lessons of Austrian Economics:

• Fostering a free-market ecosystem.
• Reinstating the integrity of currencies.
• Confronting the leviathan of debt before it consumes our prospects for economic vitality and moral rectitude.

*Disclaimer: Nothing herein is financial advice but rather a portrayal of the marketplace through an Austrian Economic perspective. It reiterates the importance of conducting your due diligence before making any financial decisions.*

Be not deceived – be prepared ~ Silver Savior
 
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• Note: We are not giving advice; we only give our opinion; we are not financial advisors. This article only represents our thoughts about the economy.