Every Time THIS Happens to Gold, Price EXPLODES

Now, if you think a 28% gain for gold is notable, well, I'd agree with you. But we do have better examples of much bigger moves in gold caused by little currency tweaks. Kinds of things you couldn't even make up. Gold has been making crazy gains lately. And if we were paying attention, we'd understand why. Crazy outside factors are driving it. If the 2025 and 2024 moves have seemed crazy, well, there are a lot of hold my beer moments in time that we should go back and look in on. Because there are very significant points in gold's history that resulted in huge price surges, like actual moonshots. And I'm going to point out a few for you. And I'm also going to point out what was happening at the time. Now, spoiler alert, they all line up with some kind of big change with the prevailing currency. Now, what we're talking about here is currency debasement. And this is nothing new. Centuries ago, you'd see emperors and kings clipping coins, shaving gold, or reducing the purity of silver coins. And as we moved away from gold and silver being the primary currency, well, things only got easier. And before we go back in time, let's just start with these one ounce coins that I show here a lot. This tube of buffalos represents a baseline. Same 20 ounces that I showed five years ago. Some of the coins are new, but the amount of gold is the same. The value has changed. These 21 coins are worth twice as much as they were the first time I put them on screen, back when the spot price of gold was right around $1,750. So the gold hasn't changed. The prevailing currency has. That's exactly what we're going to get into. Before we do, let's get a quick shout out to channel sponsor Summit Metals. You've heard me say they're a great place to find gold and silver. That's all true. They've just made it easier by rolling out some improvements to their website. Be sure to check them out at summitmetals.com. Okay, let's go back in time a little bit. This Saint-Gaudens design represents a time when gold was actually the currency. These coins would have been worth $20. Not this particular coin. This is a commemorative, but the design here. It's one of the reasons that I like these so much. And we can do better than that. I can grab one here that was actually in circulation in the early 1900s. This one is from 1904. We don't need to get too technical here, but gold at the time would have been worth $20.67. These coins are 22 carat, total weight of one ounce. So $20 in hand. But that was before the government changed the game and reset the price to $35. That's one example we're going to get into in a minute. Another one, 1971. They did it again, leading to gold price spiking from $35 all the way to $850. You heard that right. Think about how wild of a run that would have been. Now it did drop back down to around $350. We're going to get into all of that in a minute. But I want to start even further back than that. So let's go all the way back to ancient Rome. The gold aureus was the coin of the empire. It started as nearly pure gold and it held this value for centuries. But over time, emperors started to clip them. That meant less gold in each coin, but the same face value. Not a very creative way to debase your currency. You just shaved off some gold from existing coins or you began to mint them with less gold. You can see that my aureus here has 6.87 grams of gold. It was clipped or shaved originally in aureus was 140th of a Roman pound. And then it was standardized at 7.8 grams. Now it's very uncommon to find an authentic coin today that's a full 7.8 grams because this wasn't something that happened in the alleys. This is something that happened at the state level. Emperor Nero, he reduced the weight to 7.3 grams. Caracalla reduced it 6.5 grams. It was a neat trick. Now the same thing happened to silver and actually more so. The Roman denarius began as a nearly pure silver coin somewhere around 95 to 98%. A lot like these Greek drachms and tetra drachms. This Athenian aureus pure silver, like remarkably pure for the time. And it started that way in Rome. And it's actually relatively hard to find a nice quality unmolested silver coin from the Roman time because they were continually melted down and diluted. And there was a really good reason for that. The empire was spending more than it took in. So more and more copper was added to the alloy bringing the purity of the coins all the way down to 2% silver in the end. Eventually, nobody could trust the actual value of the denarius and silver coins from other regions actually became relevant again. It's a pretty clear warning of what can happen to a currency. The denarius had to be replaced entirely. And if you're curious, an Athenian tetra drachm like this, well, it would have paid a soldier or a skilled laborer four days wages. So it was four drachm. That would have been like four denarii. So those were very significant examples of currency debasement. The value of the metals didn't change. The value of the currency did. And there have been plenty of other examples of currency debasement through history. Kings in medieval Europe were clipping silver coins similar to what we saw in the Roman Empire. Same impact, lost of trust in the coin. We also have examples of new currency flooding the market. Spain flooded Europe with new world silver in the 1500s. So much silver that it actually triggered massive inflation. The money was there, but it just bought less. And then we have examples of currency debasement with no gold or silver at all. During the French Revolution, the government issued paper money backed by confiscated land. And they, of course, printed too much. That led to hyperinflation. Now, I feel like I should have better examples of all these different currencies, but I don't. Now, moving forward in time a little bit, we had the Civil War in the United States. We saw the government issue greenbacks. Those were paper dollars not backed by gold or silver. Maybe you've heard of them. They didn't go over well. Now, it didn't take long for greenbacks to lose value against hard money. People began demanding gold, as you would expect, because it simply couldn't be printed. Hey, take this piece of paper. It's as good as gold. That was a story that didn't go over. Now, in every one of these cases, gold actually held its value. The paper or the coin, that's what lost the purchasing power. But the people who held actual gold came out ahead. Now, let's dial in specifically to the U.S. dollar. I'm going to assume everybody knows what those look like. In the early 1900s, the U.S. dollar was still backed by gold. So, one ounce of gold was $20.67. And the double eagle coin, that allowed you to literally carry $20 of gold in your hand. Now, the problem was the same as each prior case. The government was spending more than it was taking in. And the only way to stretch the money supply was to change what the people had in their hand. So, the first big change came in 1933 and forth. The government ordered gold to be turned in. This was Roosevelt's executive order 6102, requiring most U.S. citizens to turn in privately held gold. Now, in exchange for your gold, you got a fixed price of $20.67 an ounce. That would be given to you in dollars. Now, there were a few exceptions, but violating that order was a federal offense and it was punishable by fines and imprisonment. And behind all of that, there was also some patriotism involved, encouraging people to do the right thing for your country. Once that gold was turned in, the government revalued it from $20 an ounce to 35. Now, that meant in terms of dollars, you just lost purchasing power overnight. But if you had held on to your gold or the few ounces you could hold on to, you suddenly had a 69% gain. So, this was a new modern currency debasement. No coin clipping required, no shaving gold off the edges or adding more copper to the silver alloy, just a signature and a new price for gold. Now, after the 1934 revaluation, gold was locked at $35 an ounce. That set the stage for the Bretton Woods Agreement in 1944, where the U.S. dollar became the world reserve currency. I'm not going to belabor the history, but other currencies pegged to the dollar and the dollar was still technically redeemable for gold. So, $35 could be exchanged for an ounce of gold. At first, this probably seemed stable enough, but the government kept doing what governments do. They spent more than they took in and they printed dollars beyond the gold that it was pegged to. By the late 1960s, other countries began turning dollars in for gold and the U.S. reserves began to drain. So, in 1971, we got the Nixon shock. President Nixon closed the gold window, canceling direct convertibility of the U.S. dollar to gold, officially making the dollar a fiat currency. So, remember when I told you about the Gold Reserve Act in 1934, when the U.S. government raised the official price of gold by 69%? Well, here's a chart of what happened when Nixon closed the gold convertibility window in 1971. The price of gold shot up from $35 an ounce to $850 in less than a decade, more than a 2,400% increase. So, in modern terms, that would be like gold running from the $3,500 all-time high to $85,000 an ounce in 10 years. Now, in the 80s, gold price did settle back down to around $350, but regardless of whether we're looking at a 24X or a 10X, anyone holding gold through that initial debasement came out way ahead. Okay, so let's pull this into modern times. What's happening right now? Well, beginning in 2008, the U.S. government has been rolling out ongoing debasement under different labels like quantitative easing or stimulus. Now, the Fed balance sheet went from under $1 trillion pre-2008 to over $9 trillion post-COVID. Now, you've heard the story, it flooded the system with trillions of new dollars. Today, it's right around $6.7 trillion. That's still multiples higher than the pre-2008 levels. And just like in prior cases of currency debasement, your dollar now buys less every single year. So what does this pattern actually look like in dollars? Well, I think we kind of covered it. Every time the currency is debased, gold responds by going higher. In the 30s, gold was revalued from $20 to $35 an ounce, so 69% gain almost overnight. But as we just saw, that was nothing compared to what happened when Nixon closed the gold window, leading to a 2,400% increase in the price of gold in under 10 years. And then in the modern era of QE and stimulus, gold rose from around $700 in 2008 to $2,000 by 2011. And even after pullbacks, it hit new highs above $3,500 just this year in 2025. So 400% gain from the financial crisis lows from 2008, 100% gains just from the past five years. But let's go back 55 years to 1970. Gold has gone from $35 an ounce to $3,500. That's why I'm putting these 1 10th ounce coins out here. They're in front of a stack of 10 one ounce coins. That's the Delta 100X. Each of these 1 10th ounce coins is worth $350. So they're worth 10 times what a full ounce was worth in 1970. 100 times price growth. These are actual cases of monetary debasement and the direct effect on gold price. I gave overnight changes, longer term changes, five-year changes, 55-year changes. None of them though are doom cases. Simple case of looking through history and finding examples of what we might see again if we had a case of aggressive money printing or QE, maybe a case of the Fed expanding the balance sheet again, or if we saw huge deficits that have to be financed with new money. Maybe if interest rates are cut too quickly to stimulate the economy or any of those levers are pulled like we've been talking about that would directly revalue gold. Any of those cases are possible. More likely though, we'll see continued less aggressive price gains, but I've just shown there are a lot of historical precedents for bigger moves. Any effort that leads to significant inflation is going to have the same impact that we've seen over and over. Gold price will move higher. Now let's be clear, this is not about speculating on a moonshot like we see in some of these other markets like crypto. It's simply a walk through time to see how monetary policy changes always seem to find their way directly into gold price. Just something to consider. And let's call it good there. That was a long one. Lots of historical shenanigans to be aware of. So let us know what you think. Are there more shenanigans to come? Working on that non-zero gold position? Let us know. And then while you're in the comments, be sure to hit that like button if you found any of this interesting. Be sure you're subscribed with notifications turned on if you want to hear more on the topic. And if you're still here, thanks again for watching. I always appreciate your time. Take care.