Are You Ready For The Gold Standard 2.0?

One thing you can always be sure of is that politicians on the left and right are spending junkies that have no problem increasing deficits and adding fuel to the fire on the Death Spiral of Debt. I guess the leaders of the House of Representatives didn’t get the memo from Elon Musk that they are supposed to cut spending, not increase it.

When you add everything up from the proposed spending by the leaders of the House of Representatives, including the increases to spending and cost of servicing the debt they will drive the deficit up to $4 trillion.

Locking the $4 trillion deficit in will be the proposed Trump tax cuts. In past reports, I speculated that the debt will reach $50 trillion by the time Trump finishes his term and these proposals make that pretty much a certainty.

One of the key drivers of the bull market in gold is the Death Spiral of Debt, as gold and debt growth are well correlated.

A key argument I have made for calling it a death spiral is that the big ticket items, (medicaid/medicare, social security, cost of servicing the debt and defense) are untouchable.

Elon Musk and his DOGE team can talk about finding waste, fraud and abuse (although fact checking is finding it is more talk than verifiable facts) they aren’t going to be able to do much about the big ticket items.

To be effective, they will need to get politicians to agree to stop being wasteful, fraudulent and abusive. Flying rockets to Mars will be a much easier task.

This isn’t a left and right thing, politicians love to spend and create debt, including Trump. If you think that has changed you are gullible and ignore all the evidence that has been piling up for decades. See $36.5 trillion dollar debt for a dose of reality.

Trump likes to threaten tariffs, but when he talks about them, Wall Street stocks tumble and he quickly has to backtrack. Wall Street hates tariffs, as they should, because tariffs are a sure way to slow the economy and drive inflation higher.

The economy is already slowing, even the new Treasury Secretary sees it and has recognized consumers have been in a recession for a significant amount of time already. Recent retail sales numbers are confirming that it is getting worse.

If you mass deport migrants it causes the economy to slow down almost immediately and does the same to inflation. Despite economists saying the drop in retail sales was due to cold weather, I think they have it wrong.

Mass deportation doesn't just take the consumers out of the market that have been removed from the country. It keeps many of the rest out of stores as well because they are afraid to leave their homes for fear of meeting ICE agents where they shop. The same thing happens at their jobs. They don’t show up for work because they don’t want to be greeted by ICE agents, which further slows down the economy.

Inflation also gets going very quickly because companies that need those workers to make a profit and provide the stuff consumers want have to jack up prices.

This isn’t rocket science, it only takes a moderate amount of acumen at math and logic.

Consumer confidence is dropping because they are concerned about the economy and inflation. Meanwhile, the buffoons at the Fed await dots to plot and keep trying to sell the idea that everything is fine, and that they are bang on the money with interest rate policy.

Fed folks have the luxury of living in a world of made up government statistics, while consumers live in the real world. I will go with consumers' opinions of the real economy 100% of the time over the Fed’s view from their ivory tower.

Although the Fed, Wall Street and financial media refuse to mention it, the reality is that stagflation is here and it is about to get worse. Blame whomever you like, but the reality is that the economy is slowing and inflation is growing.

Stagflation is extremely bullish for gold, and silver for that matter, so investors have a choice to protect themselves or roll the dice and hope that it goes away.

Gold is in a super tight trading range, forming a base with an upward bias. It is ready for a strong move above $3000.

A lot of people, myself included, have felt for a while that Bitcoin has pulled some folks away from gold and gold stocks.

We are seeing evidence that this analysis was bang on. Bitcoin has been in a major correction since late January, and in the past week or so it has been taken to the woodshed. While that Bitcoin pummeling is happening, guess what has seen cash inflows? If you guessed gold ETFs, you win the golden prize.

Gold already had a tremendous list of reasons to be bullish on the metal. Including a Death Spiral of Debt, alarming growth in the cost of servicing the debt, weaponization of the US dollar and stagflation. It didn’t need a massive Bitcoin correction.

But, here we are, Bitcoin bulls are about to learn that it doesn’t always go straight up and that it is a Ponzi scheme wrapped in a mania.

It got a pump due to Trump winning and Bitcoin bulls believing he would start a Bitcoin reserve as soon as he got into office. Which drove it above $100k to a peak near $110k per Bitcoin. Now all those buyers above $100k are significantly underwater and questioning their conviction.

Before the election, Bitcoin got a pump due to the ETFs being launched which brought in a lot of buyers with an average cost base around $75k. The way Bitcoin is dropping, it won’t be long before the ETF buyers have their resolve tested.

They better hope it can find support around that $75k level, because if it drops below that level, then a lot of Bitcoin miners will be losing money when they mine Bitcoin.

The average cost of mining Bitcoin worldwide is somewhere above the cost bases of the ETF buyers. As the high cost miners run into problems, it will cause lower cost miners huge problems as well.

Very few Bitcoin bulls see the potential for a 90% plus correction like what happened to the Dot-com stocks. But, the reality is that as Bitcoin has run up in price, so has the cost of mining it. If the Bitcoin miners run into problems, then a Dot-bomb type correction can easily happen as the system breaks down.

The Bitcoin pumpers, led by Michael Saylor and his company formerly known as Microstrategy, now Strategy have lost plenty of their luster. Since it peaked, the bloom has left the rose as it has been almost cut in half.

As Bitcoin corrects, it is going to get much harder for Michael Saylor to get loans at zero percent and money from convertible bond sales to buy more Bitcoin. In fact, it won’t be long before holders of the convertible bonds convert into stock and start blowing it out, hitting every bid. Then he won’t get more money to buy Bitcoin and pump it up.

The Bitcoin pump has happened and now the dump is engaged.

Those sitting on gains in Bitcoin would be well served to lock in those profits and switch to gold. Which looks like exactly what is happening as can be seen in the inflows of money into the gold ETFs.

They can join the gold party. Gold has been on a tremendous rally in 2025 as gold buyers are worried about tariffs being put on gold. Which has morphed into holders of paper gold through derivatives asking for delivery of the physical gold behind those derivatives.

All of the various bullish arguments mentioned earlier are tightening the already tight supply of physical gold above ground. Meanwhile gold in the ground is still being priced like gold is around half its current price.

Gold miners are setting records in free cash flow as the price of gold is well above the average cost of mining gold to the tune of around $1000 per ounce. Even high cost gold miners are seeing their bottom lines turnaround in an impressive way.

Gold mine developers with high-quality projects haven’t joined the gold bull market in a convincing way. Neither have the gold explorers with important discoveries.

Generalist investors haven’t woken up to gold stocks yet. When they do they will arrive in waves and because the gold stocks all along the food chain are so unloved and at extremely low bases will cause an incredible gold stock bull market.

Investors that follow gold and gold stocks often say they are cyclical. They are, but I think most of them are talking about short to medium term cycles.

I’m looking at a much longer term cycle, going back 50 years or so. Back then, the financial world was on the Gold Standard. It forced discipline on the spending habits of politicians and on the actions of central bankers trying to influence the business cycle.

Over the past 50 years, politicians spent on what they thought were limitless credit cards and have driven the debt to unsustainable levels. While also destroying the purchasing power of fiat currencies.

The problems that took 50 years to create will force the world to go back on the Gold Standard and it will take decades to fix the problems. As the world returns to the Gold Standard, it will drive gold higher by multiples of its current price.

This will also do wonders for gold miners, gold mine developers with high-quality projects and gold explorers with important discoveries.

I hope readers of my reports are on the right side of history.

All the best,

Allan Barry Laboucan