Emma’s Note: Emma Walsh here, managing editor of the Diary. This weekend’s guest edition comes from Dan Denning, Bill’s coauthor on The Bonner-Denning Letter.
Dan is speaking at the Sprott Natural Resource Symposium next week. This is one of the main events on commodities investors’ calendars every year. This year, it’s going “virtual.” Lots of Legacy Research folks, including Tom Dyson, Doug Casey, Dave Forest, and Nick Giambruno will also be there.
Below, Dan gives us a sneak peek into his presentation…
Do you think it’s a coincidence that the gold price popped over $1,800 per ounce less than 24 hours after the U.S. government announced a $2.7 trillion deficit for the first nine months of the fiscal year? Hold that thought…
The deficit was $863 billion for the month of June alone. The Congressional Budget Office reckons the deficit for this year will hit $3.8 trillion at this pace. The previous record for a fiscal year was $1.4 trillion. That was in 2009, at the height of the Great Recession.
These numbers are alarming because out-of-control government deficits always precede hyperinflation in a fiat-money regime. This is a point proven by Peter Bernholz in his book, Monetary Regimes and Inflation.
We already knew the huge expansion in the Federal Reserve’s balance sheet supported stock prices AND political instability (to the extent it made insiders rich, while leaving the middle class and Main Street high and dry). Bill has written extensively about this in these pages over the last few months, and we’ve focused on it in our monthly Bonner-Denning Letter issues, too.
But we seem to have reached the proverbial inflection point with this explosion in deficit spending. Something important in the monetary regime is changing.
Next week, I’ll be speaking at the 2020 Sprott Natural Resource Symposium. My publisher, Legacy Research, is a sponsor.
This annual commodities event is usually hosted in Vancouver. But for obvious reasons, it will take place online this year.
I’m going to argue that a new law is about to govern the money system. That law favors precious metals, especially gold. More on that in just a second.
First, as the Sprott symposium is all “virtual” this year, you’ll be able to watch everything online, as it happens. But you’ll also be able to save presentations and watch them later.
And the Sprott team has added interactive elements, where you can ask speakers questions, visit their virtual booths, or meet-and-greet in a public chat room with other attendees.
The event is bound to be the highlight of the calendar for gold bugs. And this year should be a humdinger.
The whole event is put together by Bill’s old friend (and my mentor in the junior mining stock investment business), Rick Rule.
Rick’s been through several commodity cycles. He knows how they work. And he’s able to bring together the best and most-experienced minds in mining and precious metals…
Some of my colleagues here at Legacy Research, including Doug Casey, Dave Forest, Nick Giambruno, and our co-contributor at The Bonner-Denning Letter, Tom Dyson, will be there. As will other colleagues from across Agora, including Byron King, Jim Rickards, Dan Ferris, and Steve Sjuggerud.
And you can be there with us (virtually) if you sign up today.
My presentation is going to be on the inverse of Gresham’s Law.
Gresham’s Law states that in a metallic monetary system with fixed exchange rates, bad money drives out good money. As governments debase the physical currency (coins), private citizens hoard the good money (gold) and spend the bad money (clipped and debased coins).
That all seems interesting, but not terribly useful right now. As I aim to show, a new inverse law explains what may happen in the coming monetary regime change.
In a fiat-money-standard world with floating exchange rates, there will come a point where good money drives out bad. People will stop trading and transacting in worthless government money.
But what money will they use? How can it be legal tender if the government doesn’t say so? What does it mean for the economy and society if the government no longer has a monopoly on what money is?
And if I’m right, what should you do with your own money in the bank right now?
These are all the things I’ll cover in my presentation.
Hope to “see” you there!
Coauthor, The Bonner-Denning Letter
P.S. The Sprott Natural Resource Symposium runs from July 22 to July 25. You can guarantee yourself access to all the investment ideas, stock recommendations, and presentations by registering here.
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