Dollar Demise Scenario
March CPI data came in hotter than expected- inflation hasn't cooled. And the flood of normies buying gold and silver at Costco, of all places, should be seen as the canary in the coal mine.
March consumer price index data is in, and it further vindicates my current world view. Inflation rose to 3.5% YoY, faster than the previous month’s 3.2% rate.
Zooming out further, according to the CPI calculator online, $100,000 in January 2020 has the same buying power as $121,072 in 2024 era dollars … put another way, unless you are worth 21 percent more than you were at the start of COVID, you have less real purchasing power than you did then.
Wells Fargo has estimated that customers at Costco — a discount chain similar to Sam’s Club — are buying perhaps $200 million per month of gold and silver bullion.
Costco is not some avant-garde investment shop in New York or San Francisco.
It’s a bricks and mortar chain, and those buys represent everyday people in America — not financial elites — picking up physical bullion bars… it’s reasonable to assume they are buying inflation hedges elsewhere aside from the checkout line at Costco also.
Warren Buffett has famously pointed out many times in the past that gold and silver produce no dividend and have no earnings, instead these things serve as “insurance” against economic failure of some kind.
For people in line at Costco to be zealously handing over dollars for shiny bars of metal should tell us the Fed has lost the PR battle, if nothing else.
People are voting with their money because nothing else seems to matter today. Since 2020, the average person hasn’t been heard, instead it has been a one-way flow of orders from D.C. to the rest of the world — and millions of humans are sick of it.
There has been an excitement around Bitcoin lately with the ETF approvals back in January, and runaway success since then.
Perhaps gold and silver aren’t yet enjoying an excitement premium… they are old and proven hedges against inflation.
Yet many people won’t buy Bitcoin — they don’t trust “the Internet” or “computers” or “math.” Despite this, something instinctive pulls at them to pick up a couple shiny bars in the checkout aisle. Something has changed within the Western man since 2020.
These people might choose to express themselves by acquiring more of the rare metals.
We might see a multi-asset flight from the bloated war losing dollar, both because people want to survive the dollar’s demise, and because consumers are actively voting with the purchasing power they still have.
As America collapses ($35 trillion in public debt is unsustainable), people will be made rich betting against it. Yet the riches won’t come from dividends or earnings, instead, it will be the maturation of a certain kind or kinds of insurance.
As the house catches fire, gold and silver might be “re-monetized” in a sense, and Bitcoin may be “monetized” fully. This isn’t riches from labor, but rather, riches from seeing the shuffle that lays ahead inevitably, and betting correctly on it.
It’s a play that can only be made once generationally, and only if you’re in the generation where everything falls apart in the West… which we are, in my view.
In other news, thank you for the recent 5 star reviews of Winner Take All. Happy to see more of you reading that one.
Onward,
D