In Times of Geopolitical Turmoil, Gold Should ‘Vastly Outperform’ Bitcoin, Says Jared Dillian

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More recently, Michelle Makori from Kitco News held an enlightening conversation with experienced finance professional and writer, Jared Dillian.

Jared Dillian is a renowned financial writer and strategist, with a background as a previous Wall Street trader. He’s celebrated for simplifying intricate investment concepts for the general public, making him a go-to expert in finance. Having once worked at Lehman Brothers, his past experiences have left an indelible mark on his outlook towards financial markets and investment plans.

Jared Dillian penned the book “Street Freak: Money and Madness at Lehman Brothers,” giving readers an exclusive perspective on the ups and downs of working at Lehman Brothers during its demise. He is also the creator of “The Daily Dirtnap,” a newsletter for seasoned traders and investors, where he shares astute observations on market tendencies and trading plans. Furthermore, Dillian writes articles for various financial magazines and offers his analysis on economic and financial matters.

In their discussion, which centered around recent financial developments, they explored how gold outperformed Bitcoin during a politically uncertain year. They also addressed the concerning situation of the US economy, marked by escalating debt and ongoing inflation. Lastly, they speculated about possible actions the Federal Reserve might take in response.

Here are are key takeaways:

1. Geopolitical Impact and Gold’s Performance: Dillian highlighted the recent incident where Iran attacked Israel, noting Bitcoin’s decline during such geopolitical unrest. He argued that in turbulent times, gold is a more reliable store of value over Bitcoin, projecting a significant uptick in gold’s value driven by increased safe-haven buying amid escalated Middle East tensions and heightened global uncertainty:

In my opinion, Bitcoin does not function as a value storage. During times of geopolitical instability, I believe gold will significantly surpass Bitcoin’s performance.

Dillian expressed his viewpoint about the robust U.S. economy, emphasizing its strong expansion and steady job market. Nevertheless, he voiced worries that inflation might not meet the Federal Reserve’s expectations, potentially hindering their plans for reducing interest rates.

“Inflation hit its lowest point around eight months ago and has been increasing since then. The most recent figure exceeded estimates, recording at 3.5% for the headline number… monetary policy is no longer tight.”

In simpler terms, he believes a stern policy will be necessary to successfully address these economic issues.

3. Debt Monetization and Its Implications: A significant portion of the discussion was dedicated to the concept of debt monetization, which Dillian believes could lead to a parabolic rise in gold prices. He explained that the U.S. government’s exorbitant interest payments make it reliant on low interest rates. Dillian says that if rates were to rise significantly, the U.S. might face functional insolvency, compelling the Federal Reserve to engage in yield curve control and extensive money printing to sustain government financing:

“Each year, we shell out approximately 1.1 trillion dollars on interest payments. To put a stop to this, the Federal Reserve could consider limiting the yield curve or implementing yield curve control, and buying government bonds directly to finance the debt. This approach might lead to a significant surge in gold prices.”

4. Short and Long-Term Predictions: In the short term, Dillian foresees a possible correction in gold prices following a rapid increase, suggesting it might be wise for investors to hedge their positions if they hold substantial gold assets. For the long haul, he believes that significant financial maneuvers, such as full-blown debt monetization, will likely occur in the next presidential cycle, drastically influencing gold prices and the broader financial landscape.

5. Financial Philosophy and Personal Strategy: Dillian also discussed his latest book, “No Worries: How to Live a Stress-Free Financial Life,” which delves into his philosophy of minimizing financial stress through wise financial management rather than mere cost-cutting. He advocates for making significant financial decisions correctly, such as housing and education, which can have far-reaching impacts on one’s financial health, more so than minor savings like foregoing daily coffee.

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2024-04-23 21:07