$1000/oz For Silver? That's Too Pessimistic

Do you believe silver could hit $1,000 and gold $10,000 per ounce? This is an absurd question; there is no way gold could reach that astronomical price level, right? Gold reaching $10k would mean a market cap of 66 trillion. Wouldn't that mean fiat will become worthless? Exactly.

There's only one scenario I can think of that can push gold price all the way to 5 digits, which is the devaluation of fiat currency. Everything has causes and effects; that's just the law of our Universe. If you throw an apple, it will eventually fall to the ground; that's Newton's law of motion. If you print an infinite number of the dollar, the dollar will eventually be devalued; that's just common sense. One doesn't need a degree in economics or finance to understand that the dollar is getting "diluted" yearly. Obviously, this phenomenon isn't limited to just the dollar, as the devaluation of fiat currencies is something inevitable.

The fragility of the traditional financial and monetary system

Did you ever feel like putting off your work? Yeah, me neither. Nah, just kidding. I procrastinate all the time; we're all human. But I guess the more relevant question is: Have you ever taken medicines with side effects just to feel better temporarily? Yes, we all probably have; we're just human. The same goes for the monetary system created by humans. It's flawed in a way that like its creators, puts off its inevitable doom. All financial systems are just inflating their currencies year over year, hoping that productivity will catch up to the debt. People create credits out of thin air (borrowing) to finance their market activity. That boosts the economic temporary until the debt starts piling up to the point of no return, and the market crashes. Governments then need to cut spending, reduce debt, and redistribute wealth which is very painful to do as all of this is deflationary. The easiest thing to do is print money which is inflationary. This is economic 101 by Ray Dalio. Apparently, governments will solve the debt problem with the easiest solution or least painful way possible. So, why didn't Sri Lanka, on the verge of bankruptcy, print more money? They probably did, and they can't do that anymore. Any more money printing will cause everyone to escape their currency and cause hyperinflation. Unlike the U.S. dollar (the world reserve currency), most countries can't abruptly print money and walk away without immediate consequences. The U.S. has the privilege to print a ton of dollars and still has DXY hit a 19-year high. The reason for that is the world heavily relies on the U.S. dollar for international trade. But at some point, the dollar will lose its status as the world reserve currency, and hyperinflation will hit if the FED keeps printing like there's no tomorrow. The insolvency of a crucial part of the financial system is all it takes for the FED to turn on the money printer again.

Even if there's no hyperinflation, the gold price can only be up from here as the M2 total supply is inflating like crazy. Remember how I used the "medicine with side effects" metaphor to describe the expansionary monetary policy? It's true that Jerome Powell is trying to tame inflation by raising interest rates, but even if the inflation calms down, the "side effect" is still unresolved. The national debts keep increasing YoY, and the M2 supply is still like 4 times higher than in 2000. They say the job of the federal reserve board is not to "cure" the economy; it's more like postponing the unavoidable death of their financial and monetary system. It's ironic that all financial systems are just like a huge ponzi scheme; no country's economy will experience growth forever.

$10,000/oz of gold is not a dream, and it could be closer than you think. With the current trajectory of the U.S. and world economy and the exponential growth of M2, we might see a change in the world order. Undoubtedly, silver is going to skyrocket as well. $1000/oz for silver? That's too pessimistic.