Why Costco’s Gold Rush Portends Disaster for America

Fear and Gold-Rushing in Costco

I would officially like to replace “canary in a coal mine” with “Costco in a gold mine.”

People for decades have used a canary keeling over in a coal mine as a way of indicating something wicked this way comes. Well, it would seem Costco has become a more modern indicator of said wickedness.

Maybe you saw the story recently: Costco, the bulk seller of toilet paper and great hot dogs (seriously, I do miss the hot dogs I used to buy outside the Costco on East Willow St. in Long Beach, California), has begun selling one-ounce gold bars.

And apparently those gold bars are selling like hot dogs… meaning customers are snapping up the bars so quickly that Costco keeps selling out, often within hours. And Costco limits purchases to two ounces per customer—which tells you that tons of customers of buying gold.

Which is precisely why I say “Costco in a gold mine” is now a modern twist on wickedness in the works.

People have lots of reasons to buy gold: Engagement rings, wedding rings, gold necklaces and bracelets to remind a loved one they’re loved (or to apologize to that loved one for something idiotic that they did).

Maybe an old gold coin from the 1800s, if you’re a collector.

However… there is only one reason—just one—why anyone would ever buy a one-ounce gold bar.

Fear.

Worry.

A sneaking suspicion that the grown-ups running the economy have lost the plot.

In a way, this rampant gold buying at Costco is good news. It says a lot of average ordinary everyday Americans are clued in. They might not know exactly what’s going down, but they know Baby did a bad, bad thing, and that whatever Baby did promises to kick us all in the keister soon enough.

Packing away some gold, they reflexively realize, is a fundamental form of financial protection. I call it “lifestyle insurance.”

Of course, all this gold buying is bad news too.

It means droves of Americans see how the coal-black storm clouds on the horizon aren’t lined with silver. So, they’re lining their own pockets with gold to see them through the disaster to come.

If you’ve been reading Field Notes for a while, you’ll know that the disaster to come centers on U.S. debt and, transitively, the U.S. dollar.

To be clear, the dollar itself is not a bad currency. Historically, it’s been a great currency. A strong currency. A currency the world admired and wanted to hold and hoard.

These days, however, our buck is in an abusive relationship it cannot shake.

The abusers are pretty much every politician from the Reagan administration onward who bought into the profoundly stupid notion that debts and deficits don’t matter. I mean, just consider all the chatter this year about the fact that interest payments on Uncle Sam’s debt will come in somewhere between $700-900 billion for the fiscal year 2023, which ended on September 30.

That’s as much as 2x the record set last year, and it represents a deeply unhealthy 15% of the U.S. budget.

Or consider new estimates that America will spend a cumulative $10 trillion on interest payments by the time this decade ends—just six more fiscal years. America’s GDP is about $27 trillion, just for comparison’s sake.

That $10 trillion will do exactly nothing to benefit or grow the economy. Uncle Sam could burn $10 trillion in a giant Fourth of July bonfire, and it would mean exactly the same thing to the economy.

Of course, politicians aren’t the only ones running this Ponzi Scheme…

We have the Federal Reserve Moose Lodge presidents who, like kangaroos driving a Mack truck, have steered the economy disastrously over the decades.

One need only look at the fact that we had 0% interest rates that then morphed into 5.5% interest rates to know that the Fed is the embodiment of the Peter Principle—a group of economists and lawyers who have risen to the level of their own incompetence.

The need for 0% interest rates in the first place stemmed from absotively bone-headed policies in the `90s and early 2000s that fueled a housing bubble and the subsequent 2007 crash. And the fact that rates soared to more than 5% from 0% in the last 15 months stemmed from the Fed’s inability to read inflationary tea leaves that were so obvious to read, even Helen Keller could’ve seen them.

The result of all that mismanagement has caused the average American to grab as many ounces of gold as they can alongside their family-sized case of Chef Boyardee Beefarino.

Like I said, this ain’t a good look.

It’s very smart of Americans to be buying gold, even as the government gaslights us about the (supposed) vigor of the American economy.

But the fact that Americans need to buy gold at Costco—and the fact that a warehouse retailer is doing bang-up business selling gold bullion—is a terrible indictment of the U.S. economy, and highlights flaws so obvious that even Marge from Milwaukee senses what’s about to slam into the fan.

So, if there’s a message here today, it’s this: Get yourself to Costco. Load up on toilet paper, Beefarino, and ounces of gold. Then, settle in for the economic super-shock to come later this decade.

Oh, and for what it’s worth, Costco’s prices on gold are pretty good. I spot-checked other gold retailers I trust, and Costco’s prices are right in line with companies whose entire purpose is selling gold.

There’s a Costco in the gold mine, and it’s portending nothing good. Be prepared.