The Biggest Financial Reset in 55 Years Is Almost Here

I was standing in the kitchen making a peanut butter sandwich, and a thought occurred: “Wait—what happened 55 years ago?” 

Now, let’s back up about 35 minutes. I was on the couch, catching up on a bit of reading by scanning headlines I’d put aside during the holidays, and I came across one from late December that noted the world’s central banks had bought more gold in 2022 than they had in 55 years. 

Interesting, I thought, making a mental note to pen a dispatch to you about gold…and then I moved on to the next headline. 

Later, as I was spreading peanut butter across a French baguette, that question hit me: What happened 55 years ago? 

It seemed odd. That was so long ago. The world economy was so much smaller then. Government debts were so much smaller. And gold was sold at a set price at the time: $35 per ounce, by law. 

Why were central banks in 1967 mainlining gold like a junkie? 

Turns out that 1967 was a pivotal year for the global financial system. 

It was the beginning of the end of national currencies backed by gold… 

The British pound was devalued that year, setting off a run on gold among central banks who feared the imminent collapse of the Bretton Woods system. That’s the global monetary system established in 1944 that made the U.S. dollar the world’s reserve currency. 

Fears spread across the Atlantic as traders surmised—rightly, it turned out—that the dollar was also overvalued, just like the pound had been, and would face a comeuppance. 

That, in turn, amplified the run on gold as central banks across Europe gobbled up as many ounces as they could afford to better survive what they saw as the death of the then-existing global monetary system. 

Soon enough, the Bretton Woods system collapsed.  

By fall 1972, President Nixon had shut the gold window in America, meaning he no longer allowed sovereign nations to convert gold-backed U.S. dollars into physical gold, as had been the case for decades. By 1973, the dollar was devalued, all global currencies were allowed to float against each other…and gold had been set free to trade on global markets. 

Now, here we are in 2023 and central banks are grabbing more gold than they did in 1967. 

Hmm… 

Might we be on the cusp of the next great monetary reset? 

Are central banks today sending the same message they sent 55 years in the past?  

It’s funny—and not in a “ha ha” way—that the events of 1967 were tied in large measure to inflation and the dollar. 

Today, we have the worst bout of inflation since the inflation crisis that began in the mid-1960s and peaked in 1980—the same stretch of inflation that included the 1967 reset. 

And we also have a dollar that, oh by the way, is demonstrably overvalued today because the Federal Reserve has managed interest rates so poorly over the last year. Raising rates so sharply and so quickly has artificially boosted the greenback relative to every other currency in the world, and to highs not seen in more than 20 years. 

I’m not saying those same ingredients must assuredly result in the same events of 1967. But I am saying that history likes to whistle similar tunes. 

Moreover, I’m saying that central banks loading up on more gold than they have in more than half a century is not a coincidence. They see something that has them shook. 

And it seems their worries are escalating. 

Across all of 2022, the World Gold Council estimates that central banks snapped up 673 tons of gold. Four hundred of those tons came in the third quarter alone, the highest amount of quarterly buying in nearly 25 years. 

For a while now, I’ve been saying a monetary/debt crisis is in the cards before this decade is out. Central bank gold buying at such worrisome levels underscores my belief that the next global monetary reset is on the horizon. 

There’s simply too much debt in the Western world, and debt is a grim mistress to service. 

And, yes, gold is absolutely going to be a massive winner as the reset unfolds. Gold has been the source of financial repair that governments (including Uncle Sam) have turned to every time a monetary crisis has erupted across history. 

Every. Single. Time. 

The fact that gold has maintained its strength for the last two decades is proof that it will serve the same role as savior of the monetary system when this next reset arrives. Gold buyers, like me, have continued to buy, or at the very least refuse to sell. We know that history is preamble. 

So, don’t be surprised to see gold prices hit five figures. 

By the same token, don’t be surprised to see bitcoin in the mix, as well. 

In 1967, gold was the only failsafe. Today, in a technologically advanced, blockchain world, governments and global monetary institutions are going to surprise the unsuspecting and call upon bitcoin—along with gold—to rescue the global monetary system from catastrophe. 

While there is enough gold in the world to cover the global financial system, ounces of gold would have to be subdivided so infinitesimally small that using gold would be impractical if not impossible on a daily basis. 

Bitcoin, on the other hand, can be subdivided 100 million times per coin. And users can carry around those fractional bits on their smartphone and easily spend them (if necessary). At the right price, there is plenty enough bitcoin to more than cover the entire global financial system, debts and all. 

Moreover, gold cannot be easily moved from seller to buyer without cost and time. Bitcoin can move around the planet in seconds and at a nearly non-existent cost. 

Efficiency will win the day. 

So, don’t be surprised to see bitcoin well into the mid- to upper-six figures…probably into two comma territory, which is actually my longer-range prediction, meaning by the end of this decade. 

Use all of that information how you will. Just remember, though, that central banks aren’t in the business of buying gold just because they’ve got nothing else better to do with their money. I mean, right now they could be loading up on U.S. dollars and Treasury bonds (supposedly a risk-free investment). 

Instead, just as they shunned dollars for gold in 1967, they’re shunning dollars for gold again today…and at pace not seen since the last monetary reset.