At best, Fed Chairman Jerome Powell is demonstrating the ignorance of an economic elite; at worst he’s a lying perpetuator of a Ponzi scheme.

Whichever, you need to do precisely the opposite of whatever he suggests.

March 22, 2021

Dear Fellow Investor,

Watching the passing parade of absurdity coming from our economic elites can leave one questioning whether to laugh or cry.

That I prefer to laugh can be demonstrated by how I mentally relate so much of the ongoing ridiculousness to episodes of Seinfeld.

For example, I just noticed some truly astounding comments made this morning by our very own Chairman of the Federal Reserve, the most powerful economic appointment in the world and one that you would think would demand some knowledge of basic economics and the role of various financial assets as a prerequisite for the position.

Chairman Powell’s comments immediately reminded me of the episode from Seinfeld where George runs from the bathroom, pants around his ankles, and falls flat on his face just as Jerry walks through the door.

Jerry’s line, “And you want to be my latex salesman?” is hilarious in the context of the storyline…and easily adapted to the present situation with Chairman Powell.

So what did Powell say this morning to tickle my satire bone?

In a Bank for International Settlements “Innovation Summit” putatively focused on digital currencies, Powell managed to take quite a swipe at gold.

“Crypto assets are highly volatile and therefore not useful as a store of value,” he said. “It is a speculative asset that is essentially a substitute for gold rather than for the dollar.”

As I noted in a tweet of the article quoting him, “How many ways can someone be wrong? Gold is a speculation? The dollar is a store of value? Is he stupid or lying? (And yes, those are nonexclusive.)”

Frankly, he could be ignorant — this is plausible considering the educational experience of virtually all the world’s central bankers.

That, however, is a charitable interpretation, considering that Powell also has the responsibility of keeping a towering house of cards erect — that being the financial markets that he and his predecessors have inflated through repeated easing interventions over the past four decades at every faint sign of economic distress.

As a result of these repeated interventions, the purchasing power of the dollar has steadily eroded. The trajectory is clear, as is the greenback’s status as a “store of value.”

We can debate what the dollar is, but store of value is definitely not it.

And gold as a speculation? The record clearly shows, if Powell would deign to review it, that goods priced in gold have barely changed in value…while those priced in dollars have demanded ever-more greenbacks for their purchase.

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If betting on a sure thing is a speculation, then gold as a bet on the dollar’s devaluation would fit that definition.

But as we know, gold is insurance against the inevitable destruction of the U.S. dollar and all fiat currencies. This is what thousands of years of economic history show us.

Perhaps they didn’t review that in Powell’s studies at Princeton.

In summary, if you didn’t know it before, you’re smarter than Jerome Powell…and he thinks you’re stupid enough to believe him.

So maybe we can take a final lesson from Seinfeld and do precisely the opposite of whatever Powell may suggest.

All the best,

Brien Lundin
Editor, Gold Newsletter
CEO, the New Orleans Investment Conference