Why Gold And Silver Could Soar

It’s Thursday evening and the voice on the other end of the phone is dumbfounded. Almost speechless.

Henry* is a plumber in the western suburbs of Sydney where he employs about twenty-five staff. He’s been in business for nearly thirty years.

Great bloke, gun operator.

When COVID blindsided most businesses a few months ago, he was able to keep his going thanks to a big pipeline of work.

And then when the new stimulus measures were announced this week, Henry was straight on the phone after he downed tools that afternoon.

“Hey mate, you know how the government is pumping all this stimulus into the economy, how the hell are they gonna pay for it?”

It’s a scary question when you think about it.

I mean, leading into the GFC in 2007 we had no debt, a budget surplus, interest rates were at more nominal rates plus we had a two-speed economy thanks to the mining boom.

But now it feels like our economy has been jammed into reverse.

We’re now in enough debt to cast a shadow over Mt Kosciuszko while our budget deficit is deeper than any hole Henry could dig with one of his fancy excavators.

But to Henry’s question, we basically have two options to fund all the stimuli…

We can either borrow more money from other countries who are just as broke as we are, or we can print more money.

Henry hates the idea of debt. If he doesn’t have the money to buy a new machine for the business, he doesn’t buy it.

He’s also suspicious about printing money…

“There must be a catch?”

And he’s dead right.

Printing money increases the supply of money in the economy, but it comes at a major cost – it dilutes the value of money and makes cash the worst investment of all.

But wait, there’s more…