As I mentioned many times before, trying to accurately forecast economic events or to “time the market” is a fool’s errand. To the chagrin of all central planners, mainstream analysts and all kinds of “experts”, the economy is a vastly complex, living organism, with too many parameters and too many moving parts to make it predictable or tamable.
That being said, understanding monetary and geopolitical history certainly helps spot larger patterns and cycles. That’s because even though history doesn’t repeat itself, it certainly does rhyme. This is especially true now. A lot of what we witnessed over the last two years was indeed unprecedented, but the patterns we saw unfold were not. Panicked reactions by central planners doing more harm than good, using helicopter money as a panacea, and using fiscal and monetary tools for political ends, ultimately led us to where we are today. An economy at the brink, inflation getting out of control and a public that is more divided than ever, between those that have already recognized that the political rhetoric does not align with their everyday experience and those that still believe that government is always the solution and never the problem.
Where we go from here and what awaits us in the coming months and years might be fraught with uncertainty, but there are signs and indications we can already see and some guidance and lessons we can derive from the past. It was questions like these that I raised in the interview that follows with Bob Moriarty, founder of 321gold.com and 321energy.com. He has a decades-long and hands-on experience in the precious metals and energy industry and his insights are also filtered through his deep understanding of geopolitical dynamics. He was formerly a pilot in the US Marines, and the first pilot to fly between the pillars of the Eiffel Tower, with more than 832 missions in Vietnam, while he also holds 14 international aviation records.
CG: For so many individual investors, but also ordinary citizens and taxpayers, the last two years have been extremely challenging. We saw many “firsts” in monetary and fiscal policy and extraordinary efforts by governments and their central banks to “rescue” the economy. Many in the mainstream financial press have argued that this approach worked and that the worst is behind us. What is your take on this outlook?
BM: Pouring gasoline on a fire is almost always a bad idea. If the medical “experts” in governments around the world hadn’t triggered a global panic over what was really no more than a bad flu season, the economy wouldn’t have needed rescuing. The entire Covid fiasco was made up out of whole cloth.
By creating an economic disaster and then pouring money onto a problem they created themselves, the governments around the world have created a monster we are just now recognizing the extent of. Just look at the alternative. Sweden didn’t lock down, didn’t use “fear porn” and didn’t destroy their economy. Today, life goes on as normal in Sweden.
CG: Politicians in the US and in Europe have tried to blame the Ukraine conflict for the inflationary pressures that countless households have been feeling for months already. Before that, it was “supply chain disruptions” or corporate greed, but the massive “print and spend” operations during the covid crisis were’t even mentioned as a possible contributor. What do you think really accounts for the return of inflation?
BM: Inflation is almost always a monetary event caused by out of control government spending. Naturally, governments never want to admit they created the inflation so they use a straw man fallacy to cover up their own actions. But in this case, the efforts by the US and EU to kill the carbon based energy sources before coming up with a suitable replacement has caused energy prices to skyrocket. And that was before the Ukraine war that is going to drive up the price of both energy and food to levels not seen in my lifetime.
CG: Focusing on Ukraine for a moment, and given that no swift and peaceful resolution to this conflict appears to be within reach, what is the economic impact you expect to see on the West? Should this crisis persist, what should we anticipate in energy markets and what does it mean for gold?
BM: One thing that is not being discussed and it should be is that all of Europe is dependent on Russian energy in the form of natural gas, coal and crude oil. Europe cannot survive economically without reasonable relations with Russia. The war is nothing more than the last ditch effort by the US to dominate the world economically. The US and NATO are failing and seem totally wiling to fight the war to the last drop of Ukrainian blood.
This would be a wonderful opportunity for Europe to have some real leadership to float to the top to provide reasonable and real solutions to the problems that the EU and US have created. We are going to see the biggest shift in economic power in history; 8,000 km to the East. China, India and Russia will be come the new economic drivers of the world, as the US-centric, debt-based economy collapses in a sea of debt that we all know will never be paid off. It’s time for a selective Jubilee.
Energy prices are going to skyrocket with many countries literally running out of diesel fuel and people could actually freeze to death in Europe next winter, if the EU continues their one-sided stupidity. The lack of grain from Ukraine and supplies being cut from Russia due to the cost of energy is going to cause economic chaos in many countries, especially in South America and Africa. Russia is essentially going to a commodity-based financial system and when the 165 countries that do not support the EU and US sanctions on Russia realize a commodity-based financial system is far superior to a debt-based financial system.
We are in the financial system crash I have forecast for many years. It will take everything down, gold, silver, bonds, the stock market, Bitcoin and real estate, but once the system has been cleared of the trash, gold and silver will rocket higher than ever.
CG: Even before this conflict, we’ve been seeing a tectonic shift in the balance of power between East and West, something that was also evident in the gold buying and reserve building by different central banks. Do you expect this shift to have a lasting impact on the gold price going forward?
BM: For certain. We are going back to a gold standard for the same reason we have used gold for 2500 years. It is an insurance policy against the stupidity of governments.
CG: Given that price increases like we’ve been seeing now haven’t really occurred in many young investors’ lifetimes, there’s a tendency to dismiss the threat of inflation in the mainstream press and the media. Most people seem to think that government interventions will suffice to fix the problem or that it can’t really get much worse. Weimar hyperinflation, or the more recent Venezuelan or Turkish disasters seem to evoke a response of “it could never happen here”. What do you think? Could it happen here?
BM: Hyperinflation is not what people think it is. People tend to think of it as a lot of inflation. Actually it is when people figure out their money has no real value and they spend everything they have on anything real assets. I already see it happening now.
CG: Since the covid crisis started, but especially now with the Ukraine conflict raging and with inflation taking off, long-term gold investors are finally getting all the confirmation they needed that their belief in precious metals as the ultimate hedge against all kinds of crises was justified. Given that all these forces are only getting stronger, do you expect to see a significant increase in first-time precious metals investors going forward?
BM: Yes and when ordinary investors realize the long-term potential in the metals, we are going to see a boom unlike any all the way back to November of 1979 to January of 1980 where prices rocketed higher. Think crypto currencies on speed.
CG: In these strange and uncertain times we live in, what would be your advice for individual investors and ordinary savers looking to protect their wealth over the long term, to keep it safe for the next generation? BM: Gold and silver are insurance policies against financial chaos. Ray Dalio said it best, “If you don’t own gold, you know neither history nor economics.”