In this week’s Money Metals Midweek Memo, host Mike Maharrey delves into the broader economic landscape following another pivotal US election.
Despite the typical hype surrounding each election cycle, Maharrey offers a unique perspective, suggesting that regardless of the outcome, Americans are likely to witness the continuation of the same trends—expanding government, increasing debt, and ongoing impacts of monetary policy.
Maharrey shares insights on why sound money, specifically gold and silver, may be the optimal choice for safeguarding wealth.
The Growing Federal Government: A Persistent Trend
Reflecting on past administrations, Maharrey highlights how each president, irrespective of party, has enlarged the size of the federal government, debt, and spending.
“Every administration expands the government,” he asserts, noting that both Republican and Democratic leaders have implemented policies that extend governmental influence. Historical data on spending demonstrates that these trends persist from the Reagan era through Biden, with minimal exceptions.
Even Trump, who campaigned on deregulation and smaller government, enacted significant measures that increased federal control, particularly in areas like gun regulation. Maharrey cautions that placing hope in presidents to address the nation’s fundamental issues—such as debt, spending, and government size—is likely misplaced.
America’s Founders Warned of This
Quoting Founding Fathers like George Mason and Thomas Jefferson, Maharrey argues that they foresaw the perils of centralized power. The nation, he explains, has strayed from its constitutional roots, where state governments were intended to wield substantial authority.
The erosion of decentralized governance has resulted in overreach, excessive taxation, and encroachments on personal freedoms. Jefferson’s admonitions about centralizing control in Washington, D.C., have proven prophetic; Maharrey labels the current federal government as one of the largest in history.
Sound Money: Gold and Silver Lead the Market
The true victors of 2024, according to Maharrey, are gold and silver. Data underscores their robust performance:
- Silver has surged by 42.4% in 2024, while gold has risen by 33.7% by the end of October.
- Both metals have outperformed major stock indices like the NASDAQ, which recorded a 24% gain, and even surpassed the broader commodity markets.
Gold’s price rally is remarkable, achieving 39 all-time highs in 2024. This performance reflects investors’ increasing faith in gold and silver as safe-haven assets amid escalating geopolitical tensions and economic uncertainty.
High Demand for Gold Continues
Investment demand for gold spiked in the third quarter due to geopolitical apprehensions and economic conditions. Maharrey reports that total gold demand reached 1,313 tons in Q3, surpassing $100 billion in value for the first time.
ETF demand also surged, with global gold-backed funds witnessing a 95-ton increase, a trend fueled by Western investors finally joining the gold surge.
Despite elevated gold prices, central bank acquisitions remain robust, with Poland adding 42 tons to its reserves, becoming the top central bank buyer for the quarter. The sustained accumulation by central banks, even at heightened prices, indicates confidence in gold’s long-term value.
Silver’s Strong Position and Growing Industrial Demand
While gold garners much attention, silver is performing exceptionally well, especially in industrial applications. Although it remains below its historical peak near $50, silver typically lags in early bull markets only to experience significant gains later. With the gold-to-silver ratio presently above 80:1, silver appears undervalued, suggesting room for growth as the market matures.
Silver is witnessing increased demand due to green energy initiatives, with industrial demand expected to maintain a supply deficit. The cup-and-handle technical pattern on silver’s 50-year chart also indicates a bullish trend, hinting at substantial price movements in the years ahead.
The Case for Decentralized Power and Local Action
A longstanding proponent of decentralized governance, Maharrey underscores the importance of focusing on state and local governments to curb federal overreach. At the Tenth Amendment Center, where Maharrey serves as national communications director, the organization advocates leveraging state and local powers to counter objectionable federal policies.
Citing the anti-commandeering doctrine and Madison’s Federalist No. 46, he elucidates how states can resist cooperating with federal policies they oppose.
Final Thoughts: Sound Money is the Real “Decision 2024”
In conclusion, Maharrey advocates that the wisest decision during this election season is to invest in sound money. With escalating national debt, aggressive federal spending, and ongoing monetary expansion, gold and silver provide stability against future economic challenges. He recommends exploring precious metals as a hedge.