Price Controls Are Coming - Another Good Reason to Own Gold

The nerve of governments and central banks. It is they that create and cause inflation, and yet they will always shift the blame onto others. In this case, retailers...

Everything has a reason.

There's a reason gold is at a record high.

It's just under US$2,700 per Troy ounce.

In Australian dollars, it's AU$3,866.

You could argue it makes no sense.

Gold isn’t any more useful today than it was 16 years ago.

In October 2008, it was just US$716.

An ounce of gold then is still an ounce of gold today.

It's still the same size. It still doesn't produce an income.

It hasn't increased its revenue, or undertaken a leveraged merger or buyout.

It hasn't developed a new product line, or hired a slick new CEO to turnaround it's fortunes.

None of these things have happened.

Gold is still gold.

In which case, why in the blazes has the price tripled?

Why is it up 277%? Over the same time, US stocks are up seven-fold. But you would expect that.

While gold hasn't changed over the past 15 years, the make-up of the stock market has changed.

There are now five trillion-dollar-plus companies. Technology has continued to advance and improve.

Artificial Intelligence (AI) is a ‘thing’ today that it wasn’t 15 years ago.

Back then, AI was reserved for tech and science magazines.

Today, everyone has heard of AI, and many have actively used it.

Many others use it without knowing it.

The point is gold hasn't changed, but stocks and technology have changed. Hence the reason for them outperforming gold.

Even so, gold has performed well… especially for a metal that hasn’t changed and doesn’t change.

So what’s happened?

It’s the same old story.

The devaluation of money by the state and the principle agent of the state - it's central bank.

The same thing that has pushed the gold price higher is the same thing that has helped push stocks and real estate higher - inflation.

Yes, stocks have had the extra factor of innovating to make them more valuable for investors.

But investors were also ‘forced’ to buy stocks because the returns on cash and bonds were too low.

The investor holding cash and bonds was worried their returns would be negative after inflation.

With sticks, they could get growth and often an inflation-beating income.

Gold doesn’t provide an income. And arguably, it doesn't really provide growth either.

Not in the same terms as stocks - it's ‘revenue’ and ‘business’ doesn't grow.

But it's price does grow.

And it continues to grow as an antidote to the never-ending cycle of government spending, and ever-rising government debt.

Of course, not that the government will take responsibility for it.

More proof of that today as the Australian government steals another ‘idea’ from octagenarian President Joe Biden.

You may recall a few months ago, Biden began talking about ‘shrinkflation’.

That’s where, rather than increasing the price of a product, a company will maintain the price, but reduce the quantity or size of the product.

Well, the Australian government must have thought that was a good way to deflect blame for rising prices from the government onto retailers.

The Australian Financial Review quotes Prime Minister Anthony Albanese:

‘We are cracking down on supermarkets to help Australians get a fair deal at the checkout. Tackling “shrinkflation” through stronger unit pricing and new penalties is part of our plan to get a better deal for Australians.’

The nerve.

The government and central bank destroy the value of money, which causes prices to rise…

And then the government blames the retailers for simply responding to the government and central bank’s actions.

The more the government interfered, the more problems it causes.

There's little doubt we’re getting closer and closer to price controls.

We’ve seen how that has played out in socialist economies.

For those who think it could never happen here… remember, a lot of things have happened over the past 15 years that previously would have been unthinkable.

A government imposing price controls on food seems today to be more likely than not.

Another reason to own gold. If price controls eventuate, things are set to get worse.

We look forward to seeing you back here tomorrow.

Kris Sayce

Editor, Crack of Doom

Issue 39 of 10,000

(We believe in the importance of setting goals. And we figure what better way than to set a big goal from the beginning. If all goes to plan, our final issue of Crack of Doom will be sometime in the 2060’s!)

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