patrick.net

KgK one says

If rates go down, gold should go up even more.

How much upside do you guys predict

Way back in the day on iTulip, EJ predicted the price of gold would ultimately have to rise to the point where it fully backed all USD currency in circulation. At that time (2014-ish) it was north of $10K. Since iTulip is no more, I hope @Patrick doesn't mind me giving this recap.

Such a radical revaluation of gold could only be accomplished by a government on the verge of compete debt default and potential hyperinflation. One scenario was that all the foreign dollars would flood back into the US - Europe and Asia selling off UST, the breaking of the petrodollar, and the collapse of US MIC arms sales to recycle dollars. This would trigger hyperinflation as the US could only print money to fund itself - nobody else would want dollars. When demand collapses and supply is too high - yeah, guess the outcome.

Given the massive increase in M2 and M3, it would probably take a price of $50K to restore solvency to the successor to the USD under the above scenario. I.e., not quite Zimbabwe levels, but a revaluation of 50K or 100K old USD to 1 new USD backed by gold. Real or otherwise tangible assets would ultimately retain some value, but in the short- to intermediate-term chaos there would be fire sales.

One of the reasons EJ gave for wrapping up iTulip was that the US economy was essentially fraudulent, and conventional valuation and macroeconomic interpretations did not apply to a completely contrived economy. IOW, we are living in a Soviet-styled fake economy, where everyone pretends it works until it doesn't. Who's left holding the bag then?

@Patrick - I don't know if you had links to iTulip back in the day (2000's) or whether I found it from a link on HousingPanic (Kief was awesome). But I'm generous enough to thank you both for collectively saving my financial ass at least twice since the 'naughties.

Yes, I remember iTulip. There are still references to it on the site:

https://patrick.net/comments?start=-40&cs=iTulip

Though I probably also linked to it a lot in my housing links, which I'm not sure I have a record of anymore.

Shit - Gold rimming $3200 now. It's gotta be the chicoms buying like mf's. Everything else is tanking.

Edit: $3206

Gold to silver ratio is over 105 right now -- which is insane. Bought some paper silver last week (SLV). The rubber band that hold these metals to one another is stretched tight. Something's gotta give...

MolotovCocktail says

Each cellphone contains ~0.034 grams of gold.

That is about $4 worth of gold in each cell phone

So how much labor is required to remove the gold ?

What is the net profit of this type of business ?

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The three major gold bull runs in modern history: 1980, 2011, and 2024–2025.
1. The 1980 Gold Spike
Peak: $850/oz in January 1980
(Adjusted for inflation in 2024 dollars: ~$3,200/oz)
Drivers:
• Runaway inflation (CPI > 13%)
• Oil shocks and stagflation
• Iranian Revolution and U.S. hostage crisis
• Weak U.S. dollar and declining trust in fiat currency
• Low interest in holding dollars due to negative real returns
Crash:
Once Fed Chair Paul Volcker hiked interest rates above 20% to tame inflation, gold collapsed. By 1982, gold fell by over 60%.
⸻
2. The 2011 Gold Peak
Peak: $1,920/oz in September 2011
(Inflation-adjusted to 2024: ~$2,600/oz)
Drivers:
• 2008 financial crisis aftershock
• Fear of bank failures and sovereign debt crises (e.g., Greece)
• Quantitative easing (QE) and rising U.S. debt
• Zero interest rates, making gold more attractive
• Concerns about U.S. credit downgrade (S&P downgraded U.S. debt in 2011)
Crash:
As global markets stabilized and interest rate hikes returned post-2013, gold lost nearly 40% over the next few years.
⸻
3. The 2024–2025 Gold Surge (Ongoing)
Peak (so far): Over $3,400/oz in 2025
(Uncharted territory—not just inflation-adjusted peak, but nominal all-time high)
Current Drivers:
• Record U.S. debt (~$35T+) and rising deficit
• Inflation fears remain even as CPI moderates
• Geopolitical instability: wars, China-U.S. tensions, uncertain global leadership
• Growing loss of faith in fiat currencies
• Central bank gold buying at record levels (especially China, Russia, BRICS)
• Interest in de-dollarization and hedging against U.S. fiscal risk
• Domestic political instability in the U.S. (fears of authoritarianism, currency controls, etc.)
Is it a bubble or just a shift?
Too soon to say—but unlike 1980 or 2011, this surge is not occurring in isolation. It’s part of a broader re-evaluation of global financial systems, fiat vulnerability, and U.S. dollar dominance.
⸻
Comparison Chart Summary
Year Peak Price (Nominal) Inflation-Adjusted Key Driver Outcome
1980 $850/oz ~$3,200/oz Inflation, oil crisis, geopolitical fear Crashed post-Volcker
2011 $1,920/oz ~$2,600/oz Financial crisis, QE, debt ceiling drama Fell post-recovery
2025 $3,400+/oz All-time high Sovereign debt, inflation hedging, de-dollarization Still climbing

This may be either the end game of the Triffin Dilemma or a prelude to a new variation of fiat dollars akin to the invention of the Petrodollar in the 1970-80's.

The dollar is becoming almost an article of faith, just like Nuclear Fusion. So near, and yet so far . . .