We Are Living Through One Of The Most Dangerous Times The World Has Ever Faced

We are living through one of the most dangerous times the world has ever faced.

May (King World News) – Dr. Stephen Leeb:  This is one of the most difficult, challenging times the U.S. and the world have ever faced. It offers just one potential win-win solution, and that’s gold, both as an investment for individuals and as the essential underpinning of a new world order.

The only thing that can be considered positive about the war in Ukraine is how clearly it has shown that powerful economies, especially democracies, must anchor their growth to the limits imposed by its material foundations. If the best things in life are free, the things needed to run an economy and raise living standards are anything but. As natural resources grow scarcer, any economy that tries to grow without increasing output from fixed amounts of natural resources will run into trouble. 

As I’ve said before, the U.S. experienced its greatest times in the half century after the Civil War and the 30 years after World War II. It’s no coincidence that in these periods, the dollar was anchored to a gold standard, ensuring that economic growth was tied to productivity. Growth was aligned with deriving output from units of human labor and units of natural resources.

Today it’s the less developed countries, those with a shorter history of modern finance than the U.S., that better understand why the monetary system should include gold. For example, after Russia’s ruble, about a month after being heavily sanctioned by the U.S., fell 30% below its pre-sanctioned level, Russia’s central bank experimented with an ersatz gold standard. The Central Bank of Russia announced it would buy 1 gram of gold for 5,000 rubles from other banks. which based on the exchange rate at the time amounted to about $1,100 per ounce. The $1,100 figure was meant to establish a lower bound for the ruble.

As it turned out, the lower bound wasn’t necessary. The ruble already had started to advance, and today it sits at multiyear highs against most other currencies. While establishing a relationship between the ruble and gold may have been a psychological plus, the ruble’s gain reflects Russia’s leverage from its commodity abundance during this era of emerging commodity scarcities. This leverage has allowed the country to demand that purchases of Russian commodities be conducted in rubles rather than in dollars or euros.

In today’s world, all economies rely on natural resources, even ones, like the U.S., where the vast proportion of growth is generated by services. I’m not referring to anything as obvious as the importance of food or energy for our survival. In highly developed countries like the U.S., where services represent 80% of our GDP, we tend not to pay a lot of attention to natural resources. Yet natural resources are vital to virtually every aspect of our economy. For example, the computer and related technologies, which are at the heart of much of our economy, require massive amounts of energy, for which oil coal, gas, and nuclear are the major sources. And many other natural resources are similarly critical to our technologies, from helium to cobalt to silver to rare earths…….More Here

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