Contact us
CALL US NOW 1-888-GOLD-160

Wells Fargo: Gold Bull Run Signals Growing “Lack of Trust” In Monetary System

  by    0   1

It’s easier to understand gold’s record-breaking move up if you look at it from the other side of the equation. The dollar is now at its all-time low compared to gold. In simple terms, the dollar is losing value and dollar debasement is driving up the price of gold.

This isn’t a narrative you don’t typically hear on the mainstream financial networks, but there seems to be a growing awareness that the dollar and the system based on it might be in trouble – even in the mainstream investment world. We’ve seen Warren Buffet make a bet on gold, and Goldman Sachs recently warned that the dollar could be in danger of losing its reserve status. Now, Wells Fargo has weighed in, warning in a report that the bull run in gold signals “a growing lack of trust in the world’s monetary system.”

Wells Fargo head of real asset strategy, John LaForge, penned the report, noting that gold has been on a strong three-year run with the price up about 35% in 2020 alone. He outlined three primary reasons gold has gone up.

  1. Low real long-term interest rates.
  2. Excessive global money printing (quantitative easing).
  3. A weakening US dollar.

LaForge goes on to offer a fourth”meta” reason for gold’s bull run that he called “the elephant in the room.”

It’s called ‘trust.’ Trust in money, over the very long term, has been a fickle thing. No paper money has survived time, while gold has. Gold is history’s trusted ‘store of value.'”

LaForge isn’t ready to perform last rights on the dollar-based monetary system just yet. He wrote that it is working today and is largely trusted. But he does think that trust is beginning to fray around the edges.

The recent rise in gold prices and cryptocurrencies may be a sign that a small, but growing, contingent is questioning the world’s monetary system.”

LaForge argues that trust is the pillar of any monetary system. When that trust breaks down, the entire system can collapse. When that happens, then what? People will revert to something proven to be trustworthy. And what has been trusted as money throughout history?


This is why gold, through much of history, has been tied to money. If history tells us anything, it is that money is only worth what someone else is willing to give you for it. If it can’t be trusted to have value, what was once money can become worthless. It seems that recent generations know little about gold and its historical role. Gold was ditched by the West as money about 100 years ago, in favor of trusting government and institutions.”

But there are plenty of reasons not to trust government and government institutions.

Since the economy crashed thanks to the governments’ shutdowns in response to the coronavirus, the federal government has borrowed trillions of dollars for its stimulus program. The June budget deficit was bigger than all but five of the yearly deficits in history. Meanwhile, the Fed is monetizing a big chunk of that debt through its government bond purchase program. In effect, it is buying up US debt and paying for it with money printed out of thin air.

Normally, the threat of price inflation would put a check on Fed money printing, but the central bankers have made it clear that they intend to let consumer prices run hot as a matter of policy. The question is if they let the inflation genie out of the bottle, will they be able to keep it under control?

I wouldn’t count on it. As Peter Schiff tweeted after gold pushed above its record price:

This record won’t last long as the dollar’s decline is only just getting started. It’s about to plunge to new depths taking the American standard of living down with it.”

If you ask me, the growing lack of trust in the dollar system is more than warranted.


Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

Bills Introduced in Mississippi and Tennessee Would Repeal Sales Tax on Gold and Silver

Bills introduced in the Mississippi House and the Tennessee Senate would repeal state sales taxes on precious metals bullion. This would not only relieve some of the tax burdens on investors in those states; it would also take a small step toward treating gold and silver as money instead of commodities.


Gold Mine Output Fell Sharply in 2020

World gold production dropped by 5.4% in 2020 according to preliminary estimates released by GlobalData last week. Global data projects gold production came in at 108 million ounces last year. The sharp decline was largely due to mine closures during the coronavirus pandemic. But it also fits into a broader trend of declining mine output […]


European Central Bank Takes Bond Market Manipulation to the Next Level

Peter Schiff recently explained how the Federal Reserve has rigged the US Treasury market. Well, the European Central Bank has taken bond market manipulation to the next level. According to a Bloomberg report, the ECB is buying bonds to control the yield spread between debt issued by various EU countries. As a result of this […]


Indian Gold Market Shows Signs of Revival

India ranks as the second-largest gold consuming country in the world, second only behind China. But over the last couple of years, the gold market in India has languished due to a combination of record-high gold prices in rupee terms and the economic impacts of the coronavirus pandemic. But were signs of revival in the […]


ETFs Charted Record Gold Inflows in 2020; Holdings Hit All-Time High

Gold-backed ETFs recorded record net gold inflows, pushing holdings globally to record levels in 2020. On net, ETFs globally added 877 tons of gold last year worth about $47.9 billion. Gold holdings rose by over one-third, ending the year at a record 3,752 tons, according to data released by the World Gold Council.


About The Author

Michael Maharrey is the managing editor of the SchiffGold blog, and the host of the Friday Gold Wrap Podcast and It's Your Dime interview series.
View all posts by

Comments are closed.

Call Now