Gold and Silver Surge, Is This 1929 All Over Again?
Hey everyone I hope you guys are having a great week, if not, well change your mindset and grind it out, lets go! Nothing in life comes easy, if it does, if its not a challenge then its not a great opportunity to improve yourself. Every challenge we face leads to growth, leads to understanding and leads to fulfillment once the obstacle is overcome. Stay disciplined, stay the path and know salvation may be near, no matter how hard the goal is know that success is closer than you think.
Its a tough climb, its difficult but have that clear vision, that clear and distinct mindset to stay the path and good things will come your way.
Alright, what we want to touch on tonight is the ongoing destruction of the fiat monetary system.
Not many see it this way, but its actually what is going on and this scares the hell out of us. At certain points in time, there are these structural imbalances that are stretched so far, that no matter the writing on the wall, many fail to see the indicators flashing red that the snap back is right in front of their faces. Now this post isn’t designed as fear porn, rather this is a statistical evaluation of our current markets positioning.
Gold and silver prices have indeed been surging at an extraordinary pace in recent months, reaching levels that many analysts describe as record breaking and indicative of broader market shifts. Spot gold has broken through $4,100 per ounce for the first time, with intraday highs above $4,200 amid a U.S. government shutdown and escalating U.S. China trade tensions.
YTD gains stand at approximately 56%, driven by safe haven demand, central bank purchases, and a weakening U.S. dollar but honestly all the fiats are being heavily discounted.
In regards to Silver its up nearly 70% YTD its outpacing gold’s gains due to industrial demand alongside its safe haven appeal.
The gold-silver ratio, currently near 86:1, suggests silver remains undervalued relative to historical norms (40-60:1), potentially setting up for further upside.
These metals are not just inflating in nominal dollar terms; they’re effectively eroding the dollar’s purchasing power. For instance, the U.S. dollar has lost about 60% of its value against gold over the past nine months, a pace unprecedented in modern history.
Since 1971 (the end of the Bretton Woods gold standard), the dollar has shed roughly 98% of its value when measured in gold, but the acceleration in 2025 is stark. The rally isn’t occurring in isolation, it’s tied to macroeconomic and geopolitical pressures that are pressuring fiat currencies, particularly the dollar.
Some of the key drivers:
Weakening U.S. Dollar -Inverse correlation: A softer dollar makes metals cheaper for non-U.S. buyers, boosting demand. Dollar Index (DXY) has fallen amid Fed rate cut expectations (97% chance of a 25bp cut in October). Even more scary is the fact that the USD share in global reserves hit a 30-year low of 42% in Q2.
Central Bank Buying- Institutions hoard gold as a neutral reserve asset, reducing reliance on USD. Global CB gold purchases hit 900 ton’s and it seems the global central banks are sniffing an eventual global gold revaluation in the future!
Geopolitical & Economic Uncertainty- Safe-haven flows amid trade wars, inflation, and U.S. fiscal woes. U.S. -China tensions and potential tariffs drive inflows. U.S. budget deficit at 7% of GDP sustains inflation fears (core PCE at 2.8%). All adding to the safe haven status of Gold.
Fed Policy & Low Rates- This uncertainty of the FOMC willing to cut rates with inflation above base case rates leads many market participants to believe the FOMC is caught in a very difficult position and ultimately many believe the printing presses will be the only answer and thus Gold is the great leveler.
Does This Signal Failing Trust in the Global Dollar Reserve System?
Absolutely, this trend strongly suggests eroding confidence in the dollar’s dominance as the world’s reserve currency and it’s not subtle. The dollar’s role has been underpinned by trust in U.S. institutions, fiscal stability, and the lack of viable alternatives since Bretton Woods. But 2025’s dynamics point to a tipping point:
De-Dollarization in Action: Central banks, especially in emerging markets (e.g., China, Russia, India), are aggressively accumulating gold to diversify reserves viewing it as a “neutral store of value” amid sanctions risks and U.S. debt concerns. Gold’s surge to $4,000+ isn’t just speculation it’s a direct hedge against USD volatility, with spot prices reflecting rejection of dollar-denominated assets. Maybe we have passed a precipice!
Historical Parallels: Similar rallies occurred during the 1970s dollar crisis (post-gold standard) and 2008 financial meltdown, both times signaling fiat erosion. Today’s version is amplified by multipolar geopolitics: BRICS nations are pushing gold-backed trade, and the USD’s reserve share has declined steadily over 23 years, favoring gold and smaller currencies like the renminbi.
As one analyst recently put it, “Gold is becoming the preferred reserve asset” as physical demand overwhelms paper contracts designed to suppress prices. Its actually crazy to think about how high the price of Gold and Silver could potentially go considering the amount of paper contracts exist and the amount of failure to delivers could explode!
What it seems like to us is that the metals acceleration is at an “extreme pace” and it is pricing in a world where trust in unchecked fiat printing (U.S. debt at 130%+ of GDP) is waning. This could accelerate de-dollarization, potentially ushering in a hybrid reserve system blending gold, digital assets like Bitcoin, and multipolar currencies. If you’re holding fiat-heavy assets, this should be your wake up call to diversify toward hard money while the transition unfolds.
We hate to say it but todays markets to us are implying a very scary analog to the roaring 1920s and this scares the hell out of us. The massive devastation that comes to the average person given the veracity of this dollar devaluation comes on a multitude of fronts. The most obvious is destruction of their purchasing power, but if it should arise, the destruction of the employment markets. Should we start to see this unfold, there is no telling the limits of the losses that risk assets will under take, and even worse, how long they will linger on for. This may be one way for Mr. Trump to secure a third term!
In the late 1920s, peaking in 1928–1929, a dramatic surge in gold and silver prices occurred alongside clear signs of eroding trust in the U.S. dollar and the global gold exchange standard. This mirrored today’s dynamics almost eerily as the metals “discounting” fiat at an extreme pace amid speculative bubbles, loose monetary policy, and international tensions. It directly preceded the 1929 stock market crash and the Great Depression’s onset in 1930–1931. The parallels are striking, though the 1920s system was still partially gold-backed (unlike today’s pure fiat), amplifying the signals.
Key Facts for the late 20s:
Silver’s “Extreme Pace”: From 1927–1928, silver rocketed 79% in one year—the fastest rally since the 1870s—driven by industrial demand (radio/electrical boom) and global monetary shifts. London silver hit 37d/oz (equivalent to $1.02 USD), outpacing gold.
Gold’s Shadow Surge: Officially pegged at $20.67/oz under the gold standard, effective prices rose as central banks hoarded physical gold (U.S. reserves jumped 20% to 6,000 ton’s). By 1929, black-market premiums hit 10–15%, signaling distrust.
Gold-Silver Ratio: Compressed from 35:1 to 21:1 in 1928 (vs. today’s 86:1), showing silver leading the charge just like 2025.
Dollar Erosion: The USD lost 25–30% of its gold-measured value from 1925–1929, per Fed data. Foreign investors dumped dollars for metals amid U.S. speculation. (Which is exactly what is happening today)
Sources: U.S. Bureau of Mines annual reports; The Great Crash 1929 by Galbraith; IMF historical reserves data.
Here are some parallels to today’s 2025 Surge:
Silver +79% (1928); Gold +11% effective
Silver +66% YTD; Gold +56%
“Discounting” fiat at historic speed, hedge against inflation/printing
DXY equiv. fell 15%; UK gold std collapse
DXY down 8%; Reserves at 42% low
We are seeing a global shift to hard assets; sanctions/trade war fears all culminating into and eventually with a collapse in trust and a triggered systemic failure.
Why It Signaled (and Caused) a Failing Trust in the Dollar System:
Structural Flaws Exposed:
The 1920s gold exchange standard (dollar as “gold proxy”) relied on U.S. credibility. But Fed money printing (M2 +60%) and speculation flooded Europe with dollars they couldn’t redeem. Foreign central banks dumped USD for physical gold/silver, crashing trust.
Quote from 1928 NYT: “Silver’s meteoric rise discounts the dollar’s debasement... a vote of no confidence in paper.” (Sound familiar?)
Global De-Dollarization Precursor:
UK abandoned gold standard (Sept 1931) post-crash; 20+ countries followed by 1933. Gold reserves shifted East (France hoarded 25%).
Silver’s role: China/India stockpiled it as “people’s gold,” echoing BRICS today.
Direct Trigger for Depression:
Deflation Spiral: Metals hoarding tightened liquidity; banks failed (9,000 by 1933).
FDR’s Response: 1933 Gold Confiscation + 40% devaluation to $35/oz—admitting failure. Silver followed in 1934 (Pittman Act).
Economic Cost: GDP -30%; Unemployment 25%. Metals surge was the warning siren.
The late 1920s metals boom was the discount on a failing dollar system, culminating in catastrophe. Today’s surge screams the same story, just in a fiat world. If history holds, brace for turbulence.
Most people don’t look at devaluation of currency correctly. Most of the time people only view it from the purview of “Inflation.” Most people know that their money is cheapening because they go to the grocery store every week and they get less and less each and every week for the same amount of spending. However this is a bit nuanced because its very incremental, well, that is until its not. Sometimes we get bouts of price increases that shift the consumers purchasing, such as when eggs went from $4 to $12. What we see normally is just a small $1 increase, which percentage wise on a $4 product is still a massive 25% increase.
Inflation by the monetarists is designed much like the boiling frog scenario, basically slowly inflate the consumers pricing and they won’t really notice. However there comes that point and time in history where that singular point is reached by which things become erratic and the monetarists control is lost. We are obviously at that point and many governments around the world are racing to acquire and accumulate Silver and Gold. This is a very, very big deal and this is the kind of monetary system change that has generational effects and we don’t want you the reader to take these moves lightly.
These moves are telling us that there are some very large players, the non zero sum game types that can print dollars and buy assets, that are trying desperately to keep this inflation under wraps, but guess what, the cat’s out of the bag. Yea that is great that equity prices have risen over 10% this year, but when you look at the actual inflation or gold deflated return, its extremely negative.
If its one thing we have learned over 25 years of trading financial markets, that is Gold will and always be the superior form of money and now its proving this each and every day. We know the monetarists will have no choice but to eventually revalue Gold, well the markets are front running this now and I do not think that the global economies can handle this type of fiat destruction. The amount of embedded leverage that is getting wiped out because of this is massive and its been hidden by the money printing itself over the last few years, but that money is now structurally hoarded by the top 5%. However even those hoarded dollars cannot escape this metals discount. Take a look at these fiat losses vs the real money holders (Gold and Silver holders)
Sorry so when you see all the investors claiming cash is for safety, please inform them they have no idea as to what in the hell they are talking about, they are fooled. If safety is losing 50%, well perhaps “safety” needs to be redefined. You know the truth, you know what real money is and we will die on this hill.
Now if full revaluation is in the future, how high can gold go? Well many Magnelibra readers know we look at the coverage ratio of US Treasury gold holdings vs actual physical cash in the system, at a minimum we would suspect a 50% cash coverage ratio which is right around a $6k gold price, but maybe the US treasury is looking for 100% coverage, and that comes in at $12.2k Gold per Oz:
So you have been warned and informed. Now could these metals come crashing down if the markets all come down, your damn right they could, but in the longer run, no what, we know fiat has no chance against Gold and Silver, we hope we have made this very clear!
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