Gold Is the New Tech

Apparently, someone knows something.

Actually, let me rephrase: Apparently, a lot of someones know something.

Maybe you saw the news that gold fever has descended upon Costco. Per Bloomberg, 77% of Costco stores across the country have sold out of the one-ounce gold bullion bars that the warehouse retailer now sells these days. This latest empty-shelf moment came just one week into October, just after new shipments of gold bullion arrived.

And what do you think that says, El Jefe?

Well, El Jefe thinks it says that a lot of Americans reflexively understand a couple of very salient truths:

1. Uncle Sam’s debt situation is untenable, yet the politicians who run Uncle Sam’s country like it’s a freewheeling cantina in Juarez, have all the economic sense of a pinata… after a dozen kids have had a go a-whacking it to unleash the candy inside.

• The US dollar is in trouble because of the pinata-brained politicians, and because of exogenous events taking shape globally these days that the pinatas cannot control. Primarily I’m talking about declining demand for the dollar, increasing fears among global central banks that America faces a debt-fueled crisis, and the potential rise of a BRICS reserve currency backed by gold and other hard assets.

And, so, Americans are invading Costcos and snapping up one-ounce gold bars like they’re boxes of Junior Mints.

How much of Point 2 are Costco gold buyers paying attention to in their Midas rush? I don’t know. It’s not zero. But clearly, Point 1 is the big driver.

America’s debt has been big news for the last many years because the DC pinatas regularly fight over the debt-ceiling, with the smoothest-brained pinatas threatening to default on America’s debt payments in order to make a point about their personal failures as rational adults.

As a result, Americans who never had reason to think about or care about the debt suddenly are thinking: “Hmmm… if I have too much debt, I reach a point where I can’t pay my bills and the shitake mushrooms hit the fan. If Uncle Sam can’t pay his debt… Holy mother of pinatas! That’s gonna be a big shitake mushroom!”

So, they’re buying gold.

Smart people.

Yesterday, gold hit a new record just over $2,674 per ounce.

We’ve smashed through my prediction from early this year that we’d see $2,500 by the time 2025 arrived.

Then again, we’ve also smashed through my prediction from May that we’d hit $2,600.

Frankly, I don’t know where to place my next prediction. Gold’s price is accelerating. It’s up nearly 30% this year, outpacing the S&P 500’s 20%-ish gain. Apple’s up 27%. Google’s up 14%.

Maybe gold is the new tech?

Or maybe Americans as a group are increasingly acknowledging that the writing on the wall is in indelible marker and the janitorial staff can’t clean it off.

These trends take time to play out. I’ve been sounding the alarm on debt and gold since 2010. In that time, gold is up 127%. Uncle Sam’s debt us up 141%.

How convenient (and expected) that gold is simply following America’s debt higher.

So, if you foresee that the pinatas in DC are going to keep on keeping on with their Oxycodone-like addiction to deficit spending, then you have given yourself a primary reason to buy gold or to add to your position. I wouldn’t be adding today, when gold is playing with record highs again, but when gold pulls back 5% or more, use those moments to your advantage.

The sad reality is that every day America adds another $10 billion to its pile of debt, or $1 trillion every 100 days, or more than $3.6 trillion every year. For comparison’s sake, the entire US budget for 2024 was initially pegged at $6.8 trillion.

Every day, America draws closer to its date with a debt crisis.

And every day, savvy Americans are waiting for Costco to open so that they can protect themselves from the know-nothing pinatas destroying the country’s financial future.