On November 7, 1973, US Senator James Fullbright introduced a very short bill – it was only ONE page – that didn’t even have a name. But Fullbright’s unnamed bill ended up being one of the most important pieces of legislation in US history. By the time Fullbright introduced his bill, it had been two years since the legendary “Nixon Shock” of 1971. That was when US President Richard Nixon implemented wage and price controls, and changed the US dollar’s convertibility into gold.
Nixon famously promised the American public that there wouldn’t be any negative consequences from
his actions. Yet inflation hit 3% the following year, in 1972. Then 4.7% in 1973. Then 11.2% in 1974.
Simultaneously, gold prices around the world were surging… from $35/ounce before the Nixon Shock, to
more than $170 in 1974.
But individual Americans weren’t allowed to benefit from those gains thanks to a forty year old
executive order that had been signed in 1933 by then-President Franklin Roosevelt.
Naturally, plenty of Americans were outraged, and a number of lawsuits were filed claiming that
Roosevelt’s order was unconstitutional.
Roosevelt was rightfully worried that the Supreme Court would overturn his order.
Supreme Court very narrowly ruled in his favor, and his Executive Order stood as law of the land for four
decades…until Senator Fullbright’s no-name law was finally passed on August 14, 1974.
Unsurprisingly, gold prices started rising dramatically in the second half of the decade; from about $180
in 1975, to a whopping $850 in January 1980.
The declining dollar was just one reason for gold’s popularity; remember the United States suffered a
deluge of troubles during the 1970s and early 1980s.
The world found out that the US President was a criminal during the Watergate scandal of 1974. Then
there was the humiliating US withdrawal from Vietnam in 1975, complete with a helicopter evacuation
of the American embassy in Saigon.
Iran seized 52 US Citizens in 1979 and then held them hostage for more than a year. Inflation raged,
peaking at 13.6%. The economy stagnated and fell into recession. Troubles in the Middle East
(including conflict with Israel) led to energy shortages and rising fuel prices.
Civil unrest and protests were a constant problem in the 70s and 80s. Meanwhile, criminals rampaged
across American cities, and the murder rate soared. Major cities like New York, LA, and Chicago became
synonymous with violent crime.
And gold became a safe haven in that chaos.
There’s an old saying (originally a Danish proverb) suggesting that if history doesn’t repeat, it certainly
rhymes. I think it’s obvious that we’re facing many of the same challenges today.
There are major problems in the Middle East. Energy is becoming scarce (especially in Europe). The US
military suffered a humiliating withdrawal from Afghanistan. Civil unrest and crime rates are totally
unacceptable. Inflation continues to rage. And the President, a.k.a. “the Big Guy,” appears suspicious
AF.
Just like in the 1970s, gold represents a safe haven from this chaos. Even though it’s hovering at a near-
record around $2000, I think that there is still a long way for gold to rise.
The US national debt is now $33.7 Trillion; that’s up more than HALF A TRILLION just in the month of
October.
The people in charge have absolutely zero fiscal restraint. Zero sense of how destructive their actions
are. They spend money and go deeper into debt as if there will never be any consequences, ever, until
the end of time. They’re disgustingly ignorant and worse, dangerous.
The Congressional Budget Office is already projecting that by 2031, the US government will spend 100%
of its tax revenue just on mandatory entitlements (like Social Security) and interest on the debt.
This means that, after 2031, the funding for literally everything else in government – from the US
military to the light bill of the White House – will have to be funded by more debt.
That’s only 7 years away.
Then, two years later in 2033, Social Security’s primary trust fund will run out of money; this will cost the
government an additional $1 trillion in spending each year to keep the program running. Naturally, they
will have to borrow that money too.
Eventually, the national debt will become so large that simply paying interest each year will consume
more than 100% of tax revenue.
The Federal Reserve will most likely attempt to bail out government by creating trillions upon trillions of
dollars. However, just as we saw over the past few years, such actions will most likely result in much
higher inflation.
I also anticipate more conflict in the world, thanks in large part to the continued decline of America’s
stature and reputation for strength.
It’s also quite likely that the US dollar could lose its royal status as the world’s dominant reserve
currency the end of the decade.
I don’t necessarily believe that the dollar will simply vanish from global trade. Nevertheless, it won’t be
“King” dollar anymore. More like “Earl” dollar, alongside other currencies and exchange mechanisms –
including gold.
In fact, we could easily see central banks around the world ditching their US dollars and loading up on
gold as part of a new, de-dollarized global financial system.
This could potentially trigger trillions of dollars’ worth of capital inflows into the gold market, causing a
surge in gold prices.
These are just some of the reasons why gold could still have a long, long way to rise from here.
Bear in mind that I’m not thinking about the gold price next month, or even next year. I think long-
term, and my views on gold are based on trends that will likely continue to unfold over the next decade.
And that’s why $2000 in gold could just be the beginning of a much bigger story.
