The Gold Flip That Breaks the System…

Back in the day—in 2017, when I first waded into crypto—a term was popular among fans of Ethereum, the #2 cryptocurrency. They called it “the Flippening.”

Before we move on to our next paragraph, let me tell you that today’s dispatch has zero to do with crypto. However, it has everything to do with the Flippening, so I need to start out in a crypto context for this to make sense. Back to our story…

The idea behind the Flippening was that Ethereum was an up-and-coming juggernaut and that it would dislodge bitcoin as the world’s most-important cryptocurrency… i.e., ETH would grow so large in cumulative value that it would “flip” the cumulative value of BTC to become the #1 in the land.

Never did happen.

Not even remotely close.

Likely never will happen. BTC’s market cap today is just shy of $2.4 trillion. ETH is a very distant second at less than $465 billion—more than 5x smaller.

But as noted, this idea of one asset flippening another is all I really care about.

Our real tale today is gold, and whether it might see its own flippening… of US debt.

That flip, were it to arrive, would mark one of the most consequential moments in modern global financial history.

Or phrased more ominously, this flippening would devastate America, the US dollar, American families, and upend the global economy.

Now to be clear, this is not something that happens anytime soon… I hope.

However, that’s not to imply it won’t happen. I suspect it will. And like so many of my suspicions, I suspect we see this event before the end of the decade.

Gold is certainly already on a trajectory to reach this conclusion.

Today, as you likely know, US debt stands at about $37 trillion.

All the gold in the world—what’s called “above-ground gold”—amounts to about $25.4 trillion with gold at its current price of $3,300 per ounce. So, we’re still a good $12 trillion away. Not a small number.

But as you might recall, I project that gold will likely hit at least $5,000 per ounce, likely (again) before the end of the decade. And frankly, we could touch $5,000 much sooner because of swelling global worries about America—politically, socially, and especially financially.

I’ve mentioned in previous dispatches that central banks are moving away from the dollar, replacing USD reserves with gold. Uncle Sam’s funny money was, as of last year, the #1 currency that central bankers wanted to own. Today, it’s #7.

I’ve also mentioned numerous times that foreign buyers are now beginning to skip US Treasury auctions, which ultimately drives up America’s borrowing costs.

Plus, we have the ongoing nuisance of politicians and their cumulative lack of Home Economics classes in high school that might have taught them a thing or three about budgets and how they work.

So the way I see it, $5k gold is a done deal. Just a matter of patience.

But you know what: At about $4,800 per ounce, the flippening happens.

Granted, that’s based on debt staying at $37 trillion. Not gonna happen.

Sammy will owe closer to $45 trillion by the end of the decade.

That would mean gold prices would need to climb to about $5,900 per ounce.

Which also is entirely possible…

What would it mean if “the flippening” were to occur?

First, I will say that the Flippening would send a clear signal: a crisis of confidence in fiat dollars and US financial hegemony, and an erosion of trust in greenbacks.

Inflation would be far worse than America has ever faced because gold at or above $5k—a monumental milestone—would mean the dollar is diving on the global stage, which jacks up prices at home for everything from gasoline and a Twix bar at Joe’s Gas-o-Rama, to mortgages, to many of the daily staples you buy down at the Piggly Wiggly or Super Target.

The Treasury Department at this stage of the game would be printing money based on the principle of “how many grains of sand are on Miami Beach? OK, multiply that by a million… and go!”

The world would have already abandoned the dollar as any kind of stable reserve, and we’d be well along the way to a global shift toward a basket of currencies (including bitcoin) as a reserve. I’m not sure the buck would be part of that basket because America’s debilitating debt-servicing costs would have global financial leaders cringing at inviting an unwanted currency into the fold.

Commodity prices across the board would soar. Sure, gold would lead the way, but copper, corn, iron ore, hog bellies, soybeans, nickel, wheat, Japanese red beans, and on and on and on would be flying as well in dollar terms.

Crypto would be king of the hill in America.

Just as Venezuelans adopted digital crystals from an online video game as a form of real-world currency, Americans would clearly adopt all kinds of crypto as their store of value. Not just bitcoin, Ethereum, and Solana, but meme coins like Bonk, Dogecoin, Shiba Inu and others, because they are so widely traded and so well-established in the cryptosphere.

Again, I want to be clear that I am not saying the Flippening is destined to happen.

But I want you to know about it—to keep the notion in the back of your noggin—because this is a gray swan that is knowable and predictable. And if it decides to land, the economic destruction it brings to American families beats anything the Great Depression dished up.

I know that $12 trillion sounds like a long way away.

And I know gold at $5,900 per ounce (a roughly 80% move higher) sounds like a long way away…

Then again, gold at more than $3,000 per ounce (a 200% move higher) sounded like drug-addled paranoia when the metal was trading at $1,000 per ounce a decade ago.

Larger numbers are a lot closer than you think when the denominator keeps growing.

The Flippening might be closer than any of us wants to imagine.