Gold Has Formed A Perfect Base To Launch From And Head To New Record Highs Against Every Filthy Fiat Currency - Including The Least Dirty Shirt

Since the middle of April, 2025, gold has been forming a strong base and hit the lower end of the base in the middle of May, and is ready for a significant breakout to new record highs. Since the May low, it has made a higher low and two higher highs.

Of course these are only technical indicators that on their own are not important unless the fundamentals are also bullish. On the fundamental front, the bullish story for gold has never been as strong as it is now.

The key driver of the gold bull market is the Death Spiral of Debt in America, and in other major economies, made worse by the cost of servicing the debt. Trump’s big spending bill has passed through the House and is working through the Senate which doesn’t do a thing about slashing spending and in fact increases it.

Trump, his team and the GOP politicians want to increase the debt limit by $4-5 trillion or eliminate it entirely. When they get the green light on the debt limit increase or elimination, they will party on with spending and debt because they are junkies that want their fix.

This in no way absolves the Democrats because their spending and debt addiction is every bit as bad. If they had the controls, they would be doing the exact same thing and will still find a way to line up at the trough. In fact, Trump and Elizabeth Warren are on the same page when it comes to completely eliminating the debt ceiling. Junkies of a feather flock together.

The US debt market is feeling the effects of unprecedented supply of debt, and buyers are reluctant to support it and could easily go on strike to force the buyer of last resort to weigh in. Jamie Dimon and others are sounding the alarm bells that the debt market is very risky and could start showing strain from the cracks in the system.

A year or so ago, when I started writing about the looming stagflation problem, not many were talking about it. Now there is a much bigger chorus singing about it, and each day that passes we are one step closer to a serious stagflationary problem. Once that genie is out of the bottle, it will not be a transitory problem and will be very difficult to fix.

Gold is telling everyone that is listening that there are serious long-term problems that are only getting much worse.

Gold is trading at, or near, record highs against every fiat currency because the fiat currency system is broken beyond repair. For five decades since the end of the Gold Standard every major currency, including the world reserve currency, has been destroying purchasing power.

Gold is second only to the US dollar held in reserves by central bankers and much sooner than most think it could very well overtake it to become the leading reserve currency once again. Nothing could be better for the global economy as it will force fiscal prudence on the politicians and take away some of the tools for the Fed to keep supplying drugs to the junkies.

Many talk about the potential that the BRICS nations could start their own fiat currency, I don’t see that happening for many years, if ever. Primarily because they don’t need to, they have gold.

The BRICS nations have been loading up and hoarding gold since the 2008 GFC, and have ramped up their buying in the past few years. They see the writing on the wall and want to own less fiat currencies and more of the soundest money which is gold.

While the central bankers and folks in the East got the memo, their counterparts in the West are ignoring the broken fiat currency and debt system. Many in the West still believe in American exceptionalism and that the US dollar is the least dirty shirt in the pile of fiat currencies dirty shirts so it will remain the world reserve currency forever.

They are convinced that because the US dollar, US debt and Wall Street stocks are so liquid that things will never change. Even though the winds of change are blowing right in their faces.

Wall Street stocks are being priced for perfection, while executives are unable to give guidance on the outlooks for their businesses due to economic uncertainty (which should frighten everyone buying Wall Street stocks). The sentiment of executives at Wall Street companies are also in decline as they are worried about inflation and a slowing economy. Sending the message loud and clear that they are worried about stagflation, as they should be.

Cracks are showing in the US debt market across the durations, they are under pressure and yields are going up. One of the reasons that more people like Jamie Dimon are worried as of late is because Japan is having massive problems with their debt market.

This shouldn’t be ignored because it is making the Japanese carry trade a shambles and Japan is also the biggest foreign holder of US debt. Borrowing money in Japan at very low rates to then lend it to America for higher yields brings a lot of liquidity into America. But, that easy liquidity carry trade is stumbling and the gap is closing as we speak.

If Japan’s debt market has severe problems, which it does, it will make its way over the Pacific Ocean very quickly. Not only will the unwinding of the carry trade cause problems, but there is a real possibility that the Japanese will sell US debt to support their own debt market.

Japan has the worst debt-to-GDP ratio of any key global economy and America is the largest debtor. If the cracks that are forming in these two countries get worse, it will cause a cascade effect in the entire global debt market. Get gold?

Japan's debt-to-GDP ratio is horrible, it is at a level that in the past was only reserved for Third World countries. Many polyannas say that it is not that big of a problem because most of their debt is held by the Japanese and they will always support it. But, if their problems get even slightly worse, they may have no other choice than to sell US debt to support their own debt market.

That won’t be good for US debt because the supply of debt is so extreme in America that even Bessent sees the writing on the wall and is trying to figure out ways to entice buyers. He wants to loosen regulations on American banks concerning leverage limits to allow them to help keep the house of cards from collapsing under its own weight.

Bessent is even hoping that stablecoins could help soak up some of the excess debt. This on its own should alarm investors. If the digital asset sector needs to help bail out the US debt market, that is extremely troubling.

He knows the supply has the potential of overwhelming the buyers and has been trying to cool down the fear factor by insisting that America will never default on its debt. The fact that he needs to make that case, speaks volumes about what he is not saying. Which is that there are yuge debt problems that can’t be fixed by growing faster than creating debt. The politicians need to kick their addiction to spending more than they should and creating debt.

If I were a foreign holder of US debt, I would be extremely concerned because if they can weaponise the US dollar, they can also default (or a kinder gentler term they would use is restructure) on the debt for foreigners.

I know, I know, the American exceptionalists will insist that America has too liquid and important of a debt market for default/restructuring to happen. Plus, as the story goes they have the printing press of the world reserve currency so they can just print their way out of the Death Spiral of Debt.

Or as Bessent is saying lately, they can grow the economy faster than the debt. But, the math is working against Bessent and the American exceptionalists. The debt is so massive now, and the cost of servicing the debt is unsustainable. The debt rubber is meeting the road.

If the politicians would get their addiction to spending and debt creation under control, then it would put a bandaid on the problem for a little while. But, Trump, the GOP and all the politicians in Washington are spending and debt junkies. Nothing has changed, see the big spending bill and desire to increase the debt limit by $4-5 trillion or eliminate it entirely.

Another thing that would help the broken debt system, is if central bankers all over the world started backing up their debt in a significant way with gold. They won’t do that in the West because they love creating debt and spending dramatically more than they should.

The global debt and fiat currency system is without a doubt broken, from the top of the Ponzi scheme downward. But that doesn’t mean that investors have to put their wealth and purchasing power at risk.

They have options, nobody is forcing them to buy priced for perfection Wall Street stocks that can’t give guidance due to economic uncertainty. They certainly don’t need to buy Bitcoin and other digital Ponzi schemes. Speaking of Ponzi schemes they don’t have to support the Death Spiral of Debt while the cost of servicing the debt is unsustainable.

By far the best option is owning gold (the soundest money) to protect their wealth and also fight the ruinous effects of fiat currencies constantly destroying purchasing power.

Even better, would be to consider gold stocks. The gold miners from the low-cost to high-cost miners are making money hand over fist, while their stocks are trading like gold is half its current price.

While the global debt and fiat currency is ailing, the supply chain of gold has issues. I hear plenty of market commentators that are bullish on gold talk about reasons for the gold bull market, I don’t hear many of them talk about the gold supply chain being broken.

A leading indicator is the fact that major gold miners and the mid-tiers are unable to increase the global production of gold. It has peaked and is set to go into long-term decline, while gold is trading at record highs against every fiat currency.

This is not wishful thinking of a gold bull. Just look at the production numbers industry wide. Then consider that the majority of major gold miners and mid-tiers are unable to increase production and are struggling to replace their old mines with new ones.

To understand why they are having these problems, one can look to the gold mine developers with high-quality projects and explorers with important discoveries. There is a dearth of these kinds of gold companies. Which means that the supply chain is going to stay broken for over a decade at a minimum and likely two or three, if it can ever be repaired.

While the gold supply chain is broken, demand is increasing primarily due to the Death Spiral of Debt. Until the supply chain starts being repaired, and the Death Spiral of Debt is as well, it is safe for investors to maintain an ultra bullish stance on gold. I don’t see any quick fixes for either.

Gold is heading much higher, last year I wrote reports that I see gold going to $20k within 10 years. Nothing has changed my opinion, if anything it is only getting stronger. I can see over $4000 this year.

But, I also believe that the best play for investors is in the gold stocks. For those that want torque with minimal downside risk, stick to the majors with low-costs of production compared to their peers that also generate exceptional free cash flow.

If an investor wants to take on a bit more risk, look at the less well known names amongst the mid-tiers that have low-costs of production and are also generating impressive free cash flow. And are having no problems replacing their old mines with new ones.

For those investors that want the potential to dramatically grow their wealth and are less risk averse, the junior gold miners that are increasing their production and bringing down their costs of production are a fantastic option.

Those that are open to more risk like me, heck I am 60-years old and still compete at horse jumping. I prefer the junior gold miners with the projects to become much bigger miners, gold mine developers with high-quality projects and explorers with important discoveries or explorers that realistically have the chance to make important discoveries.

Regardless of your risk profile, I think the most risky thing these days is to be underinvested in gold and gold stocks.

All the best,

Allan Barry Laboucan