Will Trump Revalue Gold to $10,000? Mike Maloney

The Potential for a New Gold Standard & Monetary System Reset

Key Concepts:

• Fiat Currency: Currency declared by a government as legal tender, not backed by a physical commodity like gold.
• Gold Standard: A monetary system where a country’s currency is directly linked to a fixed quantity of gold.
• Triffin Paradox/Dilemma: The inherent instability of a global reserve currency (like the US dollar) where the issuing country must run trade deficits to supply the world with its currency, ultimately undermining its own economic health.
• Fractional Reserve System: A banking system where banks hold only a fraction of deposits in reserve and lend out the rest.
• Monetary System Reset: A fundamental shift in the global monetary order, often triggered by economic crises or geopolitical events.
• Gold Certificate Accounts: Accounts held by the Federal Reserve representing claims on physical gold held as collateral.
• Statutory Price of Gold: The officially fixed price of gold, currently $42.222222… per ounce.

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Historical Context: Cycles of Monetary Systems

Mike Maloney outlines a recurring pattern in monetary history over the past 155 years, identifying four distinct systems:

1. 1870-1922: Classical Gold Standard: Full 100% gold backing of treasury notes, leading to economic boom, followed by disruption from World War I, deflation, hyperinflation, and the Genoa Conference of 1922.
2. 1922-1944: Partial Gold Standard (Gold Exchange Standard): Economic boom followed by deflation, hyperinflation, World War II, and the Bretton Woods Conference of 1944.
3. 1944-1971: Pseudo Gold Standard (Bretton Woods System): Economic boom, currency creation to fund wars (Korean & Vietnam) and social programs, a run on US gold reserves, and the Smithsonian Agreement of 1971.
4. 1971-Present: Fiat Currency System: Characterized by inflation, bubbles, busts, bailouts, income inequality, and a potential impending “emergency economic conference” – a monetary system reset.

He emphasizes that these shifts are normal occurrences, happening roughly once or twice in a lifetime, not extraordinary events. He argues that history is repeating itself and a new monetary system is likely imminent.

Evidence for a Potential Shift: “Breadcrumbs”

Maloney presents evidence suggesting a move towards a new monetary system, framing it as “breadcrumbs” left by government officials. These include:

• Donald Trump’s Statements: Trump expressed a liking for the gold standard, stating, “There’s something nice about the gold standard” and “Bringing back the gold standard would be very hard to do but boy would it be wonderful.”
• Secretary of the Treasury Scott Basant’s Views: Basant believes a “grand global economic reordering” is likely within the next four years, potentially resembling a new Bretton Woods agreement. He acknowledges the need for a system that addresses current economic distortions.
• Recognition of Gold’s Value: Basant and others acknowledge gold’s inherent value as a store of value, contrasting it with Bitcoin. He notes central banks hold gold as a “tier one asset” while largely avoiding Bitcoin.
• White House Concerns about the Dollar’s Reserve Status: A White House statement highlighted the “persistent currency distortions” caused by the dollar’s reserve function and its contribution to trade deficits, referencing the Triffin Paradox.
• Trump’s Tweet: “He who has the gold makes the rules.” Maloney interprets this as Trump’s willingness to leverage US gold reserves to achieve economic dominance.

US Gold Reserves and Potential for Revaluation

The United States currently holds approximately 2.5 times more gold than Germany, the second-largest holder. While acknowledging potential underreporting of Chinese gold holdings, Maloney asserts the US still possesses a significant advantage.

He explains that the Federal Reserve currently holds $11.37 billion in gold certificate accounts as collateral against $2.8 trillion in Federal Reserve notes. This translates to roughly 0.39 cents of gold backing each dollar at the current statutory price of $42.222222… per ounce.

Maloney posits that a return to 100% gold backing would require a gold price of $9,044 per ounce. He suggests that Trump might require more than $2.8 trillion for deficit spending, potentially leading to an even higher gold price. He emphasizes that revaluing gold is a relatively simple process – declaring a higher price and standing ready to buy or sell gold accordingly.

Consequences of a Gold Standard Return

According to Maloney, a return to a gold standard would:

• Free up $2.8 trillion: The existing gold collateral could be released for other government spending.
• Constrain Government Spending: Gold standards limit deficit spending due to the potential for “crowding out” – borrowing gold from the private sector and slowing economic growth.
• Devalue the Dollar: A higher gold price would effectively devalue the dollar.
• Rebalance Trade: A gold standard could help restore trade balance and bring manufacturing back to the US.
• Maintain US Fiscal Dominance: The US, with its substantial gold reserves, would retain its position as a global economic power.

Call to Action & Personal Investment Philosophy

Maloney encourages viewers to research the evidence presented in his videos ("A New Gold Standard, Evidence and Path to $10,000 Gold Intensifies" and "$10,000 Gold This Year, Monetary Reset Breadcrumbs in Plain Sight") and to consider investing in gold and silver through goldsilver.com.

He shares his personal investment journey, initially focusing solely on precious metals before diversifying into other assets. He emphasizes the importance of wealth preservation and leaving a better world for future generations. He notes gold has been the top performing asset class for the last 5000 years.

Notable Quote:

• Donald Trump: “He who has the gold makes the rules.” – Illustrating his belief in the power of gold reserves.
• Scott Basant: “I think that we are in at a unique moment geopolitically… There's a very good chance that we are going to have to have that [a new monetary system] in the next four years.” – Highlighting the potential for a significant economic shift.

Synthesis/Conclusion:

Mike Maloney presents a compelling case for the possibility of a new gold standard and a broader monetary system reset. He supports his argument with historical precedent, statements from key government officials, and an analysis of US gold reserves. While acknowledging the potential for a significant increase in gold prices, he frames this as an opportunity for those who are prepared. His presentation serves as both an educational overview of monetary history and a call to action for investors to consider the role of precious metals in a potentially changing economic landscape.