What Happens to Prices in a Gold Revaluation to $20000 | Rafi Farber

Hey guys, Rafi here from the Endgame Investor and today we’re going to talk about gold revaluation. A guy sent me a subscriber to the Endgame Investor sent me a video of a guy named Alan Hibbard who is an understudier employee of Mike Maloney, the author of The Secrets of Money. I think that’s what it’s called and I like Mike Maloney but this guy Alan Hibbard he’s probably a good guy but he’s wrong on this specific issue. His thesis is that gold revaluation if the Fed were suddenly to revalue gold from $42.22 an ounce where it is now on its bounce sheet to let’s say $20,000 an ounce then gold holders would not benefit that much because prices would rise very quickly and purchasing power would not shift.

For everybody else who owns gold they have the same purchasing power that they would have had before. The same. The same. So nothing went down which is very important but you know for US citizens purchasing power doesn’t go up. Very very interesting. This is completely wrong and it denies the thesis or the fact that gold is money and the dollar is only a gold derivative of money. Gold derivative of money. It’s a gold derivative. It’s a derivative of money. The dollar is not money. It’s a stand-in for money. It’s the derivative of money.

It derives its value from money which is gold not the other way around and once again when I say things like gold is money no matter how simple it sounds no matter how simple of a concept it is it’s just very difficult for many people even gold bugs to understand what that means. It means that everything in the economy is priced in terms of gold ounces not in terms of dollars. It doesn’t seem that way but that’s how it is and I will show you many charts one after another that prove this point.

The point of gold revaluation generally is to hand the treasury a whole bunch of dollars so they can spend them into the economy. So let’s say the Federal Reserve revalues gold from $42.22 where it is since 1973 to $20,000 an ounce which was his theoretical construct. Let’s say that the Fed revalues just by declaration that an ounce of gold is now $20,000. So what happens the owner of that gold which is the treasury now gets about 5.2 trillion dollars more to spend into the economy. However once they get that money it’s not like the economy has 5 trillion dollars more of stuff suddenly produced that stuff is going to be bid by the government and there’s going to be less stuff for the people and the price of the remaining stuff is going to go up because there will be less of it and there will be more dollars circulating in the banking system.

There will be massive consumer price inflation if gold is revalued to $20,000 an ounce. Also if gold is revalued to $20,000 an ounce and that is not redeemable meaning you can’t just go to the Fed’s window or the Federal Reserve Bank of whatever and say I have $20,000 give me an ounce of gold. Obviously it will not be that way. $20,000 an ounce will be the statutory rate and the market rate will have to be much higher because the amount of dollars you are willing to spend to get gold in your hand as opposed to a theoretical amount of gold that you can never get is going to be much higher.

Right now it’s about a factor of 57.3 I think it was I did the math correctly. Why? Because gold statutorily is still $42.22 an ounce but gold an ounce of gold in your hand costs about $2,500. So if you take $20,000 and you multiply it by that factor of 57 point whatever it is gold an ounce of gold in your hand is going to have to trend towards $1.2 million an ounce. Whatever the numbers are going to be what’s going to happen is that dollar holders are going to have much less purchasing power and the remaining purchasing power is going to have to shift into gold holders and to people that hold ounces of gold and their purchasing power is going to increase.

If gold is money which it is then revaluing gold shifts purchasing power away from derivative holders and to gold holders which reverses the process of inflation by shifting purchasing power back into gold holders it reverses the process of inflation which disturbs price signals which shifts power into the hands of dollar holders by giving them more purchasing power and screwing up the economic signals all over the place. I got a phone call and I forgot what I was saying but I think it was about the shift in purchasing power. If gold is money and the dollar is just a derivative then the shift in purchasing power has to happen if there is a gold revaluation to $20,000.

That is what devaluing the dollar really is. When you have a country in a currency crisis right let’s say like Egypt was just in a few weeks ago or maybe a month or two ago and they devalued the Egyptian pound versus the dollar. Why did they devalue versus the dollar? Because the Egyptian pound like every other currency in the world is a dollar derivative. So the question is when you have to devalue dollars what do you devalue them against? You can’t devalue them against other currencies because other currencies are derivatives of the dollar on top of the dollar in the pyramid in extras pyramid.

So what is below the dollar? I say this again and again it is gold itself. The only way you can revalue or devalue the dollar it has to be against gold because gold is the money and the dollar is the derivative which is exactly what FDR did in 1933 1934.

He devalued the dollar from $21 to $35 an ounce really from 1 21th of an ounce of gold to 1 35th of an ounce of gold. That shifted purchasing power from people to the government right it gave the government that purchasing power. Which was only possible that shift in purchasing power from the people to the government was only possible if the people had to give up their gold before that devaluation took place.

Otherwise, there would be no shift in purchasing power because the gold holders and the people would have an increase in purchasing power commensurate to the increase in purchasing power of the government which would revalue their own gold supply. But if purchasing power increases for everyone then purchasing power increases for nobody the whole idea is that the government gets more purchasing power and people get less purchasing power. No for prices increase price inflation gets worse and you have a shift of wealth from the people to the government and it makes everything worse.

And I’m going to show you a whole series of charts now that prove in chart land why or how gold is really money and the dollar is not and therefore a gold revaluation will shift purchasing power from dollar holders to gold holders and this is proof. First chart I want to show you that shows that gold is money and the dollar is not is this cocoa from 1970 to today. We’re going to go through a lot of charts here so here’s the beginning we all think or we all have heard that cocoa isn’t a parabola in dollar terms it definitely is.

But the problem here is the dollar more than cocoa are there cocoa issues with supply and harvest or whatever distribution who knows I don’t really understand the cocoa market it is what it is and yeah there are probably some issues which is why the price is going up and you’ll see here the price here in the black line uh on the top here is in dollars and yes it’s in a parabola and in the blue line since the 1970s. Yeah, we have a little bit of a parabola here from about 1.8 ounces to now 3.76 ounces so yeah it looks like the price has doubled in terms of gold which is pretty rare.

But the problem is really in the dollar and not gold and in gold terms cocoa is very cheap cheaper than it was throughout the 1970s 1980s even most of the 1990s and early 2000s. We’ll keep going here with the next tab and that’s orange juice. Orange juice is also in a parabola orange juice it’s getting more and more expensive at record highs in dollar terms you can see the black line at the top here.

And on the bottom, you have 1970 until today and the amount of gold ounces it costs to buy the same unit of orange juice has gone down from about 1.6 gold ounces to uh 0.16 so we have fallen by an order of magnitude in gold terms. Now the point I’m trying to make here as we go through the next charts is that these prices are not going to suddenly skyrocket in gold terms if gold is revalued to twenty thousand dollars an ounce because that’s not what money does.

The dollar is much less stable as the derivative as the unanchored derivative consumer prices are going to go way up in dollars people that have dollars are going to have much less purchasing power. So all that purchasing power is going to go into gold holders they will be the only ones able to afford chocolate and orange juice for breakfast. If all of the purchasing power heads into gold holder because only gold can now purchase these therefore the gold price of these commodities will likely fall significantly when the purchasing power from the dollar holders is erased.

Because then you have a lot less demand for these commodities because only a few people can actually buy them and so in order to distribute them you need to lower the gold price significantly so the purchasing power of gold holders increases even more. So coffee coffee is also pretty high at two thousand three hundred and sixty dollars per whatever unit of coffee it is maybe a ton who knows I don’t remember uh yeah 1970 to 2024 and the price of coffee in gold ounces keeps falling and falling and falling.

Are there supply issues yes here and there 1980s 1990s 1970s was a serious time uh but the trend is obvious and clear and will continue to be that way even if and especially if the dollar is revalued twenty thousand dollars an ounce. Milk to gold same thing sugar to gold 1970s the price was about 0.1 ounces per unit of sugar and now we’re at 0.008 so again like about an order of magnitude lower.

Feeder cattle gone from about half an ounce of gold to 0.1 a reduction of five times uh live cattle same thing uh we have lean hogs lean hogs are delicious out here but I don’t eat them um so we have about 1.1 ounces of gold to now 0.04 ounces of gold uh same thing with pork bellies for bacon bacon bacon bacon bacon bacon uh 1.3 ounces of gold 2.05 uh same thing lumber look at that 2.4 ounces of gold 2.2.

And look at that we remember when lumber had its major spike right that was over here uh at 2000 this was in 2020 2021 the lockdowns really screwed up the dollar price of lumber but and it did something for the price of lumber in uh in gold terms even right it did affect that I’m not saying it doesn’t get affected uh but even at the peak of lumber prices in 2021 in gold terms it was still around the same price it was throughout the 1990s and early 2000s in the 1970s.

Even corn from about 4.5 ounces of gold to 0.2 ounces of gold oats from 2.3 ounces of gold to 1.17 uh soybeans same thing same trajectory soybean oil soybean meal wheat uh Kansas wheat I don’t know what that is spring wheat from about 0.8 to 0.3 ounces of gold so it has fallen in price by about half and there was one supply issue here in 2008 that probably had something to do with the financial crisis who knows.

Rough rice some people like their rice rough and that is down from about 0.16 ounces to 0.008 ounces it’s fallen by about half cotton uh same thing and here we have other metals look at this aluminum we’re gonna scroll down here aluminum since 1900 from about 35 to one uh copper from about uh 2015 to about four now lead from about four or five four point five to one or point eight nine same with nickel same with uh tin zinc everything everything is down in gold terms.
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