"This may be the most dangerous time the world has seen in decades."
That's according to JPMorgan Chase CEO Jamie Dimon. His alarming statement accompanied the bank's latest earnings release.
Dimon is concerned about geopolitical strife in the Middle East, Ukraine, and elsewhere. He is also alarmed by rapidly deteriorating U.S. finances.
Dimon noted the Biden administration is running "the largest peacetime fiscal deficits ever." The unprecedented level of deficit spending, he believes, raises the risks of inflation remaining elevated and interest rates going higher.
Left unspoken are the implications for savers and investors who hold conventional financial assets.
Holders of bonds, bank certificates of deposit, and other fixed-income instruments stand to continue losing purchasing power. And the stock market isn't exactly a safe place to invest during dangerous times.
Dimon is unwittingly making the case for owning precious metals.
The sudden outbreak of war in Israel helped boost the gold and silver markets last week. Gold gained $100 on the heels of safe-haven buying.
It's unlikely the conflict in the Middle East will be resolved anytime soon. With the U.S. actively supporting Israel's war efforts, America could get dragged further into conflict with Iran or other avowed enemies of the Jewish state.
The risk of terrorist attacks against U.S. and Israeli targets is also rising.
That said, the impact of geopolitical shocks on precious metals markets tends to be short-lived.
Fear alone won't drive a major long-term bull market in gold. Steadily depreciating fiat currency, combined with favorable supply and demand fundamentals, will.
De-dollarization among foreign governments and central banks is one of the biggest emerging trends of 2023. As the U.S. Federal Reserve note loses market share, gold will gain.
The People's Bank of China reports net gold buying of 181 tonnes so far this year. China along with the other BRICS countries (Brazil, Russia, India, South Africa) and Iran are close to developing a formal currency alliance that could pose a mortal threat to global U.S. dollar dominance.
Of course, it isn't U.S. adversaries that are to blame for the dollar's loss of purchasing power.
U.S. adversaries have not caused U.S. fiscal and monetary policy to go off the rails. Our so-called representatives in Washington have.
Of course, it isn't U.S. adversaries that are to blame for the dollar's loss of purchasing power. U.S. adversaries have not caused U.S. fiscal and monetary policy to go off the rails. Our so-called representatives in Washington have.
As precious metals serve as an alternative to financial assets, dangerous developments within the financial system will likely prove to be of far greater consequence to gold and silver prices in the months and years ahead than the war that is currently commanding headlines.
About the Author:
Stefan Gleason is CEO of Money Metals Exchange, the company recently named "Best Overall Online Precious Metals Dealer" by Investopedia. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC and in hundreds of publications such as the Wall Street Journal, TheStreet, and Seeking Alpha.