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Get out of paper

The saying goes when gold and inflation are rising while the government is saying things are under control then know that someone is lying.

The economic recession and depression are two troubling brothers to the working class which are often misunderstood. The former is, at a minimum, a contraction of the GDP for two consecutive quarters while the later is the contraction that can take years or even decades to reset.

During a recession, the working class wait it over by practices like cutting budget and even borrowing.However, when depression hits,the working class got wiped out.The center won't be holding.The falcon won't see the falcon. Markets overheat, credit disappear like dew in the morning.Banks stop lending to each other and liquidity squeezes. Inflation spike and gold firms.

When things go southwards like this,the wealthy migrate their portfolios to harder assets like gold and exit the paper. Harder assets work for you not the other way round of paper when push comes to shove.

During crisis the middle class need to learn to see,grab and utilies opportunities to move a bracket up.They need to get out of paper and go into harder assets for harder assets never disappoint all the way.

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The fiat USD and the saver.

When the Israel Iran war started, a barrel of oil was costing $65.00.

Fast forward to today, it's sitting around $115/ barrel.

What's the meaning of this?

The fiat greenback has lost 77% of its value since the beginning of the war.

This means that savings in bank account, in vaults, under the mattresses have also lost the same ground against oil in terms of time value for money..Knowing the cascading effects of oil, a significant ground across all sectors.

With savings seems there is no way out.

Are savings really a game to bet on in times like these? The answer is absolutely no. Any dollar saved today will be worth less tomorrow.
This phenomenon is called inflation.

Who then is there to bail out the general populace?

This ordinarily is a crisis. If economic systems were working properly, savers were supposed to be bailed out the same way corporates and financial institutions are bailed out.

Unfortunately for poor savers, governments don't care about ordinary consumers. No bail out is coming to rescue the ordinary saver.

They are quick to bail their cartels using public funds not the other way around.

Even in advanced markets, the hymn is the same.When inflation's picks up authorities respond by increasing interest rates making borrowing very expensive.

This subsequently make products like mortgages very expensive leading to defaults and repossessions become the order of the day plunging the hardworking public in poverty

The dollar vs the gold

The two are in the ring,have been in the ring and are going to be in ring for the foreseeable future. But who is who in the ring.

A general three- decade trend analysis may give us clues.Between 1995 and 2004, gold was trading at around $330/oz.From 2005 to 2014 gold broke the $1000/oz mark largely due to the mortgage crisis, with 2011 being the pick at $1900/oz before receding to $1050/oz.

However the year 2023 saw gold breaking ranks with the greenback as it capped the year trading above $2000. By March 2025, gold was seen crossing $2900 and eventually capped 2025 at $3800.At the start of the American and Israel war against the Islamic Republic of Iran gold crossed the $5000 mark before levelling off at around $4500(currently).

The above analysis shows that the greenback got a battering of roughly 93% against the yellow metal. In other words, a person who was holding $330 in 1995 is now in deep debt while the one who was holding gold is deep in the money ie smiling all the way to the vault.

What then the outlook is holding for us?

The projections are pointing to a spike in gold prices come the close of 2026.Below are some of the few selected:
°BoA. $5000
°Goldman and Sachs $5400
°Deutsche Bank $6200
•UBS. $6200

With JP Morgan' bull scenario pointing to somewhere between $8000 and $8500 under the assumption that households increase their yellow metal's holding from the current 1% to 4.6%.

What this points out to is that the yellow metal is our sanctuary whether in crisis or not.

Look forward for part two where the drivers of the above scenario will be unpack.

Stay tuned

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