World Currencies On Life Support

Going back multiple decades into the past, you would hear stories or maybe even experienced it yourself on the giving or receiving end, when a grandparent would purchase a government bond for their grandchild. At the time, there would usually be some laughter as the child looks confused at what they had just received, but it would be followed by grandma or grandpa explaining how you can never bet against owning government debt, exclaiming, “it is a sure thing!” Through a majority of the 1900s and into the 2000s, that was true. Of course, there were disastrous economic periods scattered throughout, but one thing that kept on paying was government debt, and not just any random government, but the United States government; U.S. debt was looked at as the gold standard of debt.

However, fast-forward to the future and not only have the people begun to realize the scheme of just printing more and more dollars and going deeper and deeper into debt – so have other governments and institutions that used to line up to purchase the debt of the United States whenever the U.S. Treasury would host a bond auction. In short, how these auctions work – if the economy is strong, and demand for U.S. debt is high, this forces yields on bonds lower, meaning they pay out less to make up for high demand. On the other hand, when the economy is weak, and demand for U.S. debt is low, yields are sold at a premium and get pushed higher, paying out more to entice investors to purchase their debt.

So what happens if the U.S. Treasury does not sell all their available bonds? They go to what is called a Primary Buyer. In the past, the buyer of last resort would be the Federal Reserve itself, meaning the debt does not leave the United States due to the Federal Reserve being the central bank of the United States, and so it would end with the United States essentially buying its own debt. The reason this is bad for Western citizens, is when debt is purchased through bonds, other countries and institutions are fuelling your governments spending. Whereas, if the Federal Reserve needs to purchase the United States debt, the only way they can is by printing more dollars, flooding financial markets with dollars that did not previously exist; giving you inflation, as seen during times of massive stimulus during lockdowns. The Federal Reserve currently owns 18% of all U.S. Treasuries.

This past Thursday, the U.S. Treasury hosted a 30-year bond auction, and after all was said and done, Primary Buyers needed to soak up 24.7% of all debt that was offered; over 100% more than the average of 12% seen through this past year. Showing that the world is growing incredibly nervous that the United States will no longer be able to pay not only its investors, but also its bills. Calling into question, once again, the value of United States Dollars currently in circulation.

Turning our attention to China, who was previously one of the largest owners of United States debt, now sits at a 14-year low as they shed U.S. debt and continue to stockpile gold as rapidly as possible. This not even taking into account that China is also the world’s leader in gold production. It was also reported yesterday that the People’s Bank of China injected the most Chinese Yuan into their financial system in nearly seven years, printing a whopping $1.45 trillion Yuan ($200B USD). Currently, China is stuck between their economy weakening behind a tumbling property market and trying to defend the Yuan, which also continues to show signs of weakness. Something that is beginning to become a trend around the world. On the bright side, gold continues to make up for this weakness that is shown in national fiat currencies making up for the losses seen in the Yuan.

Looking at the charts above, you can see why through economic hardship, China has had unwavering focus when it comes to accumulating gold. Up 13.27% since November of 2022, and has surged back from a severe dip seen in October as it looks to push back toward all-time highs.

Lastly, turning to Japan, their Yen has quietly become the major world currency that people are most concerned about in financial sectors. Looking at a report put out by Bloomberg that measured the relative strength of the Yen against its G-10 peers – this is the lowest the Yen has fallen since 2007. Again with that date, right prior to the Great Financial Crisis. It should also come to no surprise that Japanese citizens have been flocking to gold to protect themselves as the Yen continues to slide, and gold continues to knock on the door of new all-time highs when measured in Yen.

As you can see, going back to last November gold has gained nearly 20% when measured in Yen, recently made an all-time high, and is now pushing toward a new one as Japan keeps putting out poor economic news.

It is becoming more and more obvious that as we see more signs of the global financial system beginning to breakdown, that inevitably it will need to reach some sort of climax in order for us to repair, recover, and move forward. Hopefully, learning from our mistakes and reinstating gold and silver back as the foundation of our monetary system, giving it real value. In the meantime, people need to focus on preparing themselves for what may transpire, as like we have learned, wealth is not created nor destroyed, it is merely transferred. This is why we believe countries are buying more gold than ever before: they see the transfer of wealth between debt based assets and value based assets coming toward us, with gold and silver being the best value based asset mankind has ever known. Below you will find sovereign 1 Oz silver coins, always a favourite amongst silver owners as they are assured their precious metals are coming from a reliable source.

2023 1 Oz Silver Britannia Tube