A big change happened in 1971 when the U.S. Government decoupled the dollar from gold and based it on “fiat”: a decree saying that these pieces of paper have value just because the government said so. Historians now call this event the “Nixon shock,” and for good reason – the federal deficit quickly doubled, stagflation hit, and the price of oil skyrocketed.
The closing of the gold standard also kicked off a nonstop central bank money printing spree, which has only accelerated with each passing year. As a result, the dollar’s purchasing power has been absolutely crushed:
Courtesy: Bonner & Partners, FRED
A nation’s currency is based on trust and lasting value, and countries around the world have understandably come to the conclusion that the U.S. dollar possesses neither of those attributes. The American government’s relentless fiat money printing has led to global de-dollarization, with major world powers dumping dollars at a record pace.
The latest readings on Treasury International Capital (TIC) data, which measures the flow of portfolio capital into and out of the U.S. and helps gauge the direction of the U.S. dollar, are absolutely abysmal:
As you can see, nations are divesting themselves of U.S. dollars at the fastest rate since the Great Recession of a decade ago. De-dollarization is in full effect, with world nations recognizing the crumbling value of the dollar and witnessing with horror the $22 trillion-and-growing debt that the American government has amassed.
What are they replacing these dollars with? In the face of a global economic slowdown, central banks around the world are quickly loading up on the best crisis hedge and history’s most reliable store of value: gold. China, Russia, Japan, Turkey, India, and other countries are accumulating gold in anticipation of crippling dollar inflation and economic turbulence.
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To give you a visual representation of this, you can see how China’s been loading up on gold like there’s no tomorrow:
Courtesy: PBOC, Bloomberg
Russia is the multi-year frontrunner in the race to accumulate the most gold:
Courtesy: OMFIF, Bloomberg
Sophisticated investors are positioning themselves now in a couple of ways. First, they’re buying physical gold if they don’t already own it, which isn’t a bad idea at all in a world that’s quickly dumping the dollar. But they’re also buying shares of world-class mining companies, like Marifil Mines Ltd. (TSX.V: MFM, OTC: MFMLF), which has a CEO who’s famous for building profitable businesses.
I’m referring to Mr. Roberto Abenante, who successfully founded and/or directed a number of public and private companies across various industries. He’s proven himself over the years, with a consistent track record in the mining, energy, agriculture technology, and life science industries.
Courtesy: Roberto Abenante
Given his extensive experience, there’s no question that Roberto Abenante knows business and finance: he’s a CPA with an educational background in finance and accounting who’s held senior financial advisory roles at Deloitte & Touche and PricewaterhouseCoopers. He’s now devoting his energy and extraordinary know-how to Marifil Mines, a premier mining company with Argentina’s most promising development and exploration projects.
The mining industry is expecting great things from Mr. Abenante and Marifil Mines – and so are forward-thinking investors, who see the writing on the wall for the U.S. dollar and recognize this truly rare and amazing opportunity in the gold mining space.
Research Partner, PortfolioWealthGlobal.com
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