Expect Run To Gold, Not Dollars, In Coming Crisis | Matthew Piepenberg

Key Concepts

• Mean Reversion: A market phenomenon where prices tend to revert to their historical average.
• Credit Crisis: A situation where financial institutions are unable to meet their obligations.
• "Uh-oh Moment": A colloquial term for an unexpected negative event in the market.
• Precious Metals: Gold and silver, considered safe-haven assets.
• US Dollar (USD) / US Treasury: Traditional safe-haven assets, but their reliability is questioned in the current macro environment.
• Inflation: A general increase in prices and a fall in the purchasing value of money.
• Bull Market: A period of generally rising prices in a financial market.
• Secular Direction: The long-term trend of an asset.
• Counterparty Risk: The risk that one party in a contract will default on their obligations.
• Fiat Money: Currency that a government has declared to be legal tender, not backed by a physical commodity like gold.
• Devaluation: The reduction in the value of a currency relative to other currencies or commodities.
• Ponzi Scheme: A fraudulent investment operation that pays returns to earlier investors with money taken from later investors.
• Debt-to-GDP Ratio: A measure of a country's debt relative to its economic output.
• Budget Deficit: When government spending exceeds revenue.
• De-dollarization: The process of reducing reliance on the US dollar in international trade and finance.
• Gold Revaluation: The process of adjusting the official value of gold reserves.
• Gold-Backed Treasury: A hypothetical US Treasury bond backed by gold.
• Triffin's Dilemma: The inherent conflict in a reserve currency system where the issuing country must run deficits to supply global liquidity, potentially undermining confidence in its currency.
• Exorbitant Privilege: The advantage a country with the world's reserve currency enjoys, such as the ability to export inflation.
• Rust Belt: Industrial regions in the US that have experienced economic decline.
• Petro-dollar: The system where oil is priced and traded in US dollars.
• BIS (Bank for International Settlements): An international financial institution owned by member central banks.
• Tier 1 Asset: An asset considered to have the highest quality and lowest risk.
• DXY (US Dollar Index): An index that measures the value of the US dollar relative to a basket of foreign currencies.
• FX Reserves (Foreign Exchange Reserves): Assets held by a central bank in foreign currencies.
• FX Swaps: Agreements to exchange currencies for a set period.
• "Milkshake Theory": A theory suggesting that in times of crisis, capital flows into the US dollar.
• Store of Value: An asset that maintains its purchasing power over time.
• Wealth Preservation: The act of protecting one's assets from loss.

Market Outlook and Precious Metals as a Safe Haven

The current market sentiment suggests a global anticipation of a "mean reversion," a "credit crisis," or an "uh-oh moment" in the S&P 500. In such scenarios, the world is increasingly turning towards precious metals (gold and silver) as a safe haven, rather than the US dollar or US Treasuries. This perspective is presented by Kaiser Johnson of Liberty and Finance, featuring Matthew Pipenberg from Von Greer's Gold.

Recent Market Volatility and Gold's Resilience

Matthew Pipenberg addresses recent significant price swings in the gold market, noting a $180 drop on a Friday, followed by a $105 rise on Monday and a $260 drop on Tuesday. He characterizes these as "massive gyrations" but considers them "very typical intraday moves in a bull market." Pipenberg emphasizes that he and other experts like Alistair Mcloud, Egon von Greyerz, and Middle Coop are "not phased by this" due to a strong conviction in gold's "secular direction." He argues that these moves are designed to "shake out nervous and levered investors" and "trend followers" with stop-loss orders.

Pipenberg distinguishes gold from typical assets like commodities or risk assets, stating it's "part of the major status quo shift in the world in the monetary setting." He believes the long-term direction of gold is "well above 5, 6, 10,000 in the years ahead," making short-term price fluctuations irrelevant for long-term investors who hold gold for "10, 15, 20 years." He aligns his strategy with central banks and other investors by "holding in gold or we're saving in gold and we're spending in fiat."

The Macroeconomic Case for Gold

Pipenberg elaborates on the fundamental reasons for gold's long-term strength, citing several critical macroeconomic indicators:

• Entitlements in the US: Described as "probably the biggest Ponzi scheme in history."
• Debt-to-GDP Ratio: Currently at 120%.
• Budget Deficits: Standing at $2 trillion.
• De-dollarization: A global trend of reducing reliance on the US dollar.
• Central Bank Gold Stacking: A significant increase in gold reserves held by central banks.
• Talk of Gold Revaluation: Discussions about revaluing gold's price.
• Judy Shelton's Proposals: Suggestions for a gold-backed US Treasury.

These factors, according to Pipenberg, indicate a "seismic monetary shift, a geopolitical shift, and a currency shift." He dismisses the intraday price movements as "peanuts" compared to these larger shifts. He questions why anyone would sell a "key asset with no counterparty risk" when the global financial system is riddled with counterparty risk across US Treasuries, the US dollar, risk assets, stablecoins, and AI stocks.

He likens the current situation to the Weimar Republic, where temporary positive news led people to sell gold and buy the depreciating currency, only for the currency to collapse further. Pipenberg asserts that the problems gold is an antidote to – the devaluation of fiat currencies – are "endemic to the global macro system" and will not disappear due to short-term price fluctuations. He reiterates that his conviction is based on holding gold for decades, not weeks or months, and that his thousand-plus clients from 90 countries share this perspective.

Valuing Wealth in Ounces vs. Dollars

Elijah K. Johnson introduces the concept of valuing wealth in ounces of precious metals rather than in dollar terms. Pipenberg agrees, highlighting that while the US dollar might be preferable to local currencies in some distressed economies (like Argentina), in "absolute terms," the dollar is "losing purchasing power dramatically against gold and silver." He points out that all major currencies are losing value against gold, making it a superior store of value.

This phenomenon is not new, tracing back to historical principles like Sir Thomas Gresham's observation in the 16th century that "bad money will drive out good money." Pipenberg draws parallels to ancient Rome, where the debasement of currency led to its eventual replacement. He argues that the current cycle of "credit cycles, cycles of bad currencies, cycles of incredibly negligent mismanagement" is a recurring historical pattern.

The core issue, he explains, is "too much debt," leading to currency debasement, which eventually makes the currency "unloved." Citizens then realize that hard assets, particularly gold and silver, offer better purchasing power. He dismisses complex financial jargon like CPI scales or yield curves, stating that people "all feel the inflation" and the devaluation of their currency.

Pipenberg provides historical examples of US currency devaluation:

• 1933: The US went off the gold standard, confiscating gold and revaluing it from $20 to $35 an ounce, a nearly 70% devaluation of the dollar.
• 1971: Nixon took the US off the gold standard, leading to an 8,000% rise in gold over 50 years and a 90% drop in the dollar's value.

He concludes that the current situation is a point where the "jig is kind of up," evidenced by de-dollarization, deformed equity and credit markets, and central banks holding more gold than US Treasuries since 2014. The proposal by Judy Shelton for a gold-backed US Treasury further underscores this shift.

The Possibility of a Gold-Backed Treasury and Gold Revaluation

Regarding the rumors of a gold-backed US Treasury, potentially announced on July 4th, 2025 (the US's 250th anniversary), Pipenberg states that Judy Shelton considers it a certainty. While he cannot predict with certainty, he finds the mere discussion of such a proposal significant. He interprets Shelton's stance as a "confession" that for the US Treasury to be more trusted, it needs to be backed by gold, signifying gold's greater confidence over the dollar.

He explains that the US Treasury could revalue its gold certificates to market price or set a new, higher floor for gold. He believes a revaluation is "inevitable," with some, like the head of Bank of America, agreeing. Pipenberg suggests the Treasury might wait for gold to reach higher valuations (e.g., $8,000 or $10,000) before revaluing, as this would provide a more substantial boost to their gold holdings (currently valued at $42 per ounce based on 260 million ounces). This strategy would be a "one and done" event, maximizing the benefit of revaluation.

He argues that gold's rise is not due to its inherent qualities but because fiat money is constantly being created, while gold is not. He also points out that reported inflation rates are significantly lower than the actual inflation experienced, making yields on US IOUs (Treasury bills to 30-year bonds) effectively negative. This, he contends, means US IOUs are "constructively defaulting."

The world, including China, Russia, and BRICS nations, recognizes this devaluation, leading to de-dollarization. The weaponization of the dollar in 2022 was a "watershed moment," eroding trust in it as a neutral reserve asset. This has accelerated de-dollarization and the shift away from the petro-dollar. The fact that central banks now hold more gold than US Treasuries is a key indicator of this shift.

The "Exorbitant Privilege" and Triffin's Dilemma

Pipenberg discusses the "exorbitant privilege" of having the world reserve currency, as articulated by John Connally. This privilege allows a country to export inflation and maintain demand for its currency, even if it's being debased domestically. However, he argues that in 2025, it has become "our currency, our problem."

This shift is due to several factors:

• Unwanted US Treasuries: If yields rise, the US has to pay more to service its debt.
• Triffin's Dilemma: A stronger reserve currency leads to trade deficits, making exports more expensive and hollowing out domestic manufacturing. This has been evident in the US Rust Belt and the offshoring of production since 2001.

Pipenberg suggests that a cheaper dollar could potentially benefit US industry by making exports more competitive. However, he notes that this is a complex issue, and blaming external factors like trade partners is misguided; the problem lies with domestic spending and currency management.

He believes the "our currency, your problem" paradox is ending, transitioning to "our currency, our problem." While debasing the dollar might not be enough to compete with labor costs in BRICS nations, the dollar's status as the world reserve currency is unlikely to be replaced by a single currency. Instead, he foresees a "multi-polar era" with regional currencies used for trade, settled in gold. The BRICS nations have been preparing for this since 2014, accelerating since 2022, with gold becoming a key strategic reserve asset for net settlement. The world is increasingly trading around the US dollar, even if it remains the reserve currency. This is why central banks have been stacking gold at record levels.

Addressing Concerns About Market Pullbacks

In response to concerns about potential pullbacks in gold and silver, referencing the 2011 highs and subsequent drops, Pipenberg acknowledges that pullbacks are normal in bull markets. However, he stresses that the world in 2025 is "very, very different" from 2011 due to factors like the BRICS, de-dollarization, and central bank preferences. He notes that institutions like Morgan Stanley are recommending significant gold allocations, and central banks are prioritizing gold over US Treasuries.

He believes that while silver may exhibit higher volatility (outperforming gold on both the upside and downside), its long-term trajectory is significantly higher. Pipenberg acknowledges the counterargument, citing Henrik Zeberg's view of a potential "last dance" for the dollar and Brent Johnson's "milkshake theory" predicting a spike in the DXY (US Dollar Index) to 130. This could lead to a significant retracement in gold and silver.

Pipenberg's counterargument is that the world's actions, particularly central banks' preference for gold over US Treasuries, indicate that in a future crisis, the world will turn to precious metals rather than US Treasuries and the dollar as a safe haven. He argues that the trend of central banks dumping US Treasuries and stacking gold is already happening, making a repeat of the 2008 scenario unlikely.

Even if a DXY spike occurs, as predicted by Zeberg and Johnson, Pipenberg believes gold prices will not necessarily retrace significantly. He aligns more with Brent Johnson's view that a strong dollar and a rising DXY can coexist with a rising gold price. He concludes that in the event of another "uh-oh moment," gold is more likely to see further appreciation rather than a substantial retracement.

He acknowledges that market crises can lead to sell-offs in precious metals due to margin calls, as seen in 2008. However, he asserts that gold would spike back up, as it did post-2008. Even those who predict pullbacks, like Zeberg, ultimately see gold "racing to the moon."

Pipenberg advises long-term investors not to worry about timing the market or waiting for pullbacks. He uses the example of Henrik Zeberg's prediction of a 30% pullback when gold was at $2,900. Waiting for that pullback would have resulted in missing out on gains, as gold is now significantly higher. He emphasizes that trying to time the market is a "fool's errand" and that his conviction is based on gold's long-term trajectory, not short-term price movements.

He concludes by stating that gold will always be a stronger store of value and a better measure of wealth than fiat money, regardless of its current price. He encourages listeners to measure their wealth in grams, ounces, and kilos, rather than dollars or other fiat currencies, to protect against currency risk and the "melting ice cube" of fiat money.

Von Greer's Gold Resources

Matthew Pipenberg directs listeners to the Von Greer's Gold website (vg.gold) for free educational resources on gold ownership, including interviews with experts, articles, and breakdowns of jurisdictional pros and cons for holding gold outside the banking system. He highlights that this education is available to everyone, not just clients.