In Gold We Trust, Released on 3/16/21

0:12​ Introduction
3:26​ Russell’s reasons for changing his mind on Inflation
9:10​ Are radical ideas like MMT influencing recent developments?
12:10​ Are we witnessing a replay of the 1920s?
16:40​ The new Cold War is in full swing!
22:23​ What does inflation mean for financial institutions and the people on the ground?
25:42​ Is the crack up boom starting?
31:41​ Closing all the loopholes and financial repression
45:54​ Central Bank Digital Currencies
49:35​ Russell’s case for gold
52:35​ Russell’s case against Bitcoin
55:27​ Library of mistakes

Fundamental changes
Over the last decades, Russell Napier has been well known to be a deflationist, but the recent developments have changed his mind. It is well worth noting, that his reasons do not stem from the amount of stimulus or other developments of that nature. Rather, it’s a fundamental change in how the system works, that prompted his change in opinion. One of these changes is, that governments are providing credit guaranties to commercial banks. In short, through the power of regulation, governments have taken control of the commercial banking system. Therefore, broad money supply will be much higher than in recent decades. Now central banks also have to manage political agendas like climate change, inequality and many more, which further shift away the focus of controlling inflation. It’s a change in policy and how and on what grounds money lending is done. For all this reasons and many more, higher inflation is here to stay.

The new Cold War
Another big driver for inflation is the new Cold War we are currently witnessing between China and the United States. It might still be in his infancy, but writing is on the wall. Containing China will be another big factor, which drives inflation in the coming years if not decades. While on the one hand protectionism would shut off the huge market china is, on the other hand, all the things no longer available through china would now have to be produced at home. With the Cold War developing, investment into China from the west will increasingly be seen as funding the enemy.

Inflate the problem away
The current mission, western nations are undertaking, is that of inflating away their huge amounts of debt. To achieve this, yields have to be low and inflation has to be high. It is precisely this, what we are seeing right now, with the ECB announcing, that they won’t let yields rise beyond a certain amount. As we predicted, yield curve control is upon us. It is with this combination, that governments have in the past inflated away the debt which they had accumulated. Napier sees yield curve control as one of the biggest blunders ever executed by a central bank. The course is set to further suspend the free market and the engine will be fed a lot of coal on its way towards a command economy.

Closing all the loopholes
A big problem with this scheme of inflatin away the debt, is that we currently still have several loopholes for people to escape the hidden taxation via inflation. Real assets and especially gold spring to mind. Also, worth noting is Bitcoin and the huge emphasis its followers have on doing exactly that, escaping the system. All of these will have to be closed as best as possible for this plan to work. Financial repression will be one of the big topics in the near future. Up until now, it has been hidden somewhat obvious but still hidden enough for normal people through regulations. More drastic and possibly draconian measures will have to be undertaken in the future to secure the financial system.

Central bank digital currencies as the way to go?
Central bank digital currencies in short CBDCs are one of the big developments last year. Central banks seem to be quite interested in the subject, and they have good reasons for that. As pointed out when we mentioned bitcoin, private cryptocurrencies are very dangerous for the financial system, as they undermine their credibility and provide loopholes. For that reasons and to control money on another level never seen before CBDCs will be created.

Russell’s case for gold
So far gold has been rather underrepresented, so let us change that. Currently, gold has been hit because of rising yields. This has many people worried about the price of gold. But as we pointed out, the event of yield curve control changes the whole picture. This as well as negative interest rates, will be one of the big drivers for a rise of the gold price.

Professor Russell Napier is author of The Solid Ground investment report for institutional investors and co-founder of the investment research portal ERIC–a business he now co-owns with D.C. Thomson. Russell has worked in the investment business for 30 years and has been advising global institutional investors on asset allocation since 1995. He also is the author of the book Anatomy of The Bear: Lessons From Wall Street’s Four Great Bottoms (‘a cult classic’ according to the FT) and he is founder and course director of The Practical History of Financial Markets course that is part of the Edinburgh Business School MBA. Russell is a director of the Mid Wynd International Investment Trust. He is a member of the investment advisory committees of two fund management companies, Cerno Capital and Kennox Asset Management.

Ronald-Peter Stöferle is Managing Partner and Fund manager at Incrementum AG, based in the Principality of Liechtenstein. The company focusses on asset management and wealth management and is one hundred percent owned by its partners. Ronald manages a fund that invests based on the principles of the Austrian School of Economics.

  gold, inflation, investing, markets, russell napier