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Paper money has always depreciated to its intrinsic value, which is zero. In contrast, gold, silver, and platinum are still difficult to create artificially. I'm not saying it's impossible, because maybe one day it will happen. But at this time they cannot be manufactured. And, because of their limited quantity and high cost of extraction, they have a rarity value and cannot be destroyed.
Let's say if you keep a Picasso in your house and the house burns down, then the Picasso becomes worthless. But gold will not burn. It will still remain. It will melt. Yes, but it will still remain. Gold, silver and other real assets have once again found themselves in the spotlight due to recent developments in international financial markets.
Concerns about the long-term reliability of fiat currencies are growing as governments have historically high debt levels and central banks continue to increase the money supply. Mark Faber, a well-known Swiss investor, economist, and publisher of a report on economic crises, has long spoken about the dangers of excessive money printing and currency devaluation.
He argues that while rare real goods such as gold and silver have retained their value throughout history, paper money has often lost its purchasing power. Physical precious metals are becoming increasingly important for long-term capital protection. According to Faber, as the current climate of aggressive monetary expansion could further pressure fiat currencies, while rising gold prices may indicate a change in investor sentiment, he believes the bigger picture is one of growing disillusionment with conventional monetary system fresh analysis of the gold and silver markets.
Interest rates and commodity prices move in long-term cycles. The peak of interest rates in the world in terms of the long-term cycle was in 1981 , after the inflationary period of the late 60s and 70s, and we reached a peak in the 10-year Treasury bond at 15.84% on September 21, 1981, after which we saw a secular decline in interest rates, in other words, a " bull" market in bonds and stocks; and I assume that interest rates should have bottomed out sometime in the early 2000s.
But because of the Fed's actions, money printing, and artificially lowering interest rates, we were able to keep them low until August 2020, when 10- year bonds bottomed out at 0.5%. Okay, half a percent. And since then we have been in a structure of rising interest rates. So this means that when interest rates went down and government debt went up, it didn't hurt because the government could borrow money at ever lower rates.
So while the debt was growing, the burden of interest payments was not increasing. In fact, the interest burden was even decreasing as the average interest paid on total debt declined. But the situation has changed, and now interest payments on government debt are no longer $300 billion a year, but over a trillion, and with deficits and Trump—he doesn't care about debt.
He has never paid off any debts in his life , and now he leads the country with the largest debt in the world. If you think about it, it's just awful. In any case, the debt level increases by the amount of the deficit every year, which means the debt increases by about $2-3 trillion per year, and interest payments increase because rates are no longer falling.
Theoretically, the Fed, the Federal Reserve, can lower rates, and as you know, they started lowering them in October 2024. But how did the bond market react? He didn't go up. Bond yields have not decreased, but on the contrary, have increased. This is a very strong signal that the Fed, the Federal Reserve System, has lost control of interest rates.
They control short-term rates. They can set short-term rates at 0%, they can. But 30- year Treasury bonds will not rise from this, but will fall, because the market will say, "Okay, the government no longer has any discipline." And I'll tell you, the last two or three days the price of gold has gone up, a very sharp increase, a clear signal to buy.
Not in the long term, but in the short term, I think gold reacted that way , went up, because people are scratching their heads watching the American government, particularly the Treasury. OK. They want the Fed to lend money to Japan to support the Japanese yen. In other words, they don't want the Japanese to sell Treasury bonds.
So, if you think about it, they are lending money to someone so that someone can buy or hold these bonds. They don't want that. They would rather lend someone money to hold these securities than accept that they will sell them. And this is a manipulation that cannot end well. You will say, of course, Mark, we know all this, but this could take a very long time.
Well, you know, in economic theory, when you start printing money, one of the problems is , can you only print a little? It's impossible. You have to either stop it and bring inflation down , and during that process, like during surgery in a hospital, the economy goes down, it's very painful, but it can be done if you start at the very beginning.
In my opinion, we started this practice of printing money in December 2008 . In my opinion, it is already too late to correct this abuse of the monetary system without significant losses. Do you understand? But it is possible to do it. But you know, people will suffer, politicians will lose power, the government will change , so it's possible, but Trump won't do it.
He doesn't want the stock market to crash because of his friends and because of himself. His wealth is built on asset inflation. He would have gone bankrupt repeatedly if the system hadn't constantly printed money and raised the prices of his assets. As a decade of low interest rates draws to a close, the global financial system is undergoing a significant structural transformation.
Borrowing costs have been gradually falling for most of the past 40 years, allowing governments to take on ever-increasing debt without excessive interest rates. After long-term interest rates reached historic lows, this trend began to change. The cost of servicing the national debt has skyrocketed due to rising interest rates, and annual payments have already exceeded $1 trillion .
Another worrying sign is that long-term bond yields have risen, not fallen, even after central banks began cutting rates. However, while financial assistance between foreign governments and central banks can support demand for government bonds, it can also hide fundamental flaws in the system. The pressure on ignore.
As governments continue to run huge deficits and their debt grows rapidly, be sure to like , subscribe, and click the bell to get notified . Paper money is a construct created primarily by central bankers who control the supply of money and, together with the government, are interested in increasing this supply.
And so over time, inevitably, in every society that has existed in the world, from the beginning of recorded history, 5000 BC, to today, every paper currency has eventually lost its value completely. Paper money has always tended towards its intrinsic value , which is zero. Whereas gold, silver, and platinum are still difficult to create artificially.
I'm not saying it's impossible, because maybe it will happen someday. But to this day, it is impossible to manufacture them. And because of their limited quantity and high cost of extraction, they have a rare value and are not destroyed. Let's say if you keep a Picasso at home and the house burns down, then the Picasso will be worthless.
But gold will not disappear, it will still remain. It will melt, yes, but it will still stay there. Now , if the firefighter is not very honest, he can take it away. Philosophically speaking, all our fortunes can be good. But they are fleeting. In other words, if you look at life, you have things that can only be used temporarily in eternity.
It's a very short period of time, say 50 or 100 years, and then you go somewhere else and you have nothing. I look at all the stock markets in the world, and obviously the US market is very expensive, whereas the Asian markets, especially in Southeast Asia, are inexpensive, and there are a lot of good companies there that are selling at 8 or 10 times earnings and 6-7% dividend yields.
But this is more the exception than the rule, and retirees are more likely to invest according to an index, such as the S&P 500 or similar. And the S&P 500, like the NASDAQ, are indexes that are heavily weighted by expensive stocks. You understand , 30% of the S&P is in technology, related industries, artificial intelligence, semiconductors, etc.
, so the index is at a high level. Secondly, historically this is not the best time to buy when the market is euphoric. We can measure the euphoria by trading volume and so on, and it was certainly everywhere, and in South Korea, probably even more so than in the US, where people take out loans to buy stocks.
And the third thing, I think, is often ignored: we have a serious problem in the world, especially in the Western world, not so much in emerging markets, but the Western world is not living according to its means. Living beyond our means means we have spent more money than we have, and as a result, the level of debt in the world has never been higher, and not just at the individual level.
In other words , your household borrows money to buy a car and so on. It's always been that way. But now governments are heavily in debt, and that debt is not going anywhere unless there is a major crisis, and... The interest on the debt has to be paid, so the government has to borrow even more money to pay the interest on the debt, and...
maybe it will last for a while, I agree, and I can live with that, but it can't last forever. You know, sooner or later it will lead to collapse. Now the question is: will this collapse happen tomorrow morning, tonight, or in 3 years? We don't know. But this is a situation where, if I were only depending on my retirement savings , I would be very worried.
Marc Faber's message serves as a warning about the long-term dangers facing financial markets and currencies. He argues that because governments and central banks have the power to increase the money supply, paper money can be printed indefinitely. He states that this has consistently reduced the purchasing power of currencies throughout history.
On the other hand, assets such as gold, silver, and platinum are difficult to obtain, are rare in nature, and cannot be created by governments. According to Faber, this makes tangible precious metals an important strategy for long-term wealth protection. Faber also expresses concern about the state of the stock market, especially in the United States.
He said expensive technology, artificial intelligence and semiconductor companies now make up a significant portion of important indexes such as the S&P 500 and NASDAQ. However, the massive debt accumulated by households, corporations and governments is perhaps his biggest concern. According to Faber, the Western world has spent significantly more than it earned for a long time, which has led to an unsustainable debt burden.
As debt grows, governments are forced to borrow more money to cover ongoing interest costs, creating a vicious cycle that becomes increasingly difficult to sustain. .
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