U.S. inflation is running at its fastest pace in the past 40 years, peaking at 9.1% in 2022, and remaining hot at 3.1% late 2023.

Government overspending is often inflationary. And, although today’s dollar will buy less than it did 10 years ago, the Fed knows today’s dollar still pays off a dollar’s worth of ten-year-old debt. Inflating the money supply is one way to pay down public debt with cheaper dollars. It is a source of money that doesn’t have to be explicitly taxed, which typically angers the voting public. But every dollar they add subtracts purchasing power from dollars already in existence.

Printing money is an easy, but insidious fix for governments. Every dollar created erodes the power of dollars you’ve already earned and saved. Meanwhile, politicians continue to spend, and our national debt and deficits continue to soar. The consequence? Inflation.

In response, the Federal Reserve increased its key interest rate by over 5% in 2023 as consumer goods prices continued to rise throughout the year. Increasing the key interest rate can help to slow down inflation by making it more expensive for consumers and businesses to borrow money. However, it can also have negative effects on economic growth and employment.

There were five major bank failures in 2023: Silicon Valley Bank, Signature Bank in New York, First Republic Bank of San Francisco, Heartland Tri-State Bank and Citizens Bank in Iowa.

There were no major bank failures in the two years prior to that. The return of bank failures demonstrates that the Fed’s aggressive interest rate policies can destabilize formerly stable institutions. These bank failures are a prime example of the dislocations that are exposed when rate cycles shift.

Investors should be particularly concerned about commercial real estate, with over $60 billion in fixed-rate loans requiring refinancing at higher interest rates, and more than $140 billion in floating-rate commercial mortgage-backed securities maturing in the next two years.

When a bank fails, it means that it is unable to meet its obligations to depositors and creditors, such as paying out customer deposits or repaying loans. This can lead to a run on the bank, where depositors rush to withdraw their funds, which can further exacerbate the bank’s financial problems.

In some cases, the government may intervene to bail out or rescue failing banks to prevent a wider economic crisis or financial panic. However, in other cases, banks may be allowed to fail, which can result in significant losses for depositors and investors.

Will there be more bank failures in 2024? No one knows. In the meantime, you might be thinking it would be good to own some tangible assets within arm’s reach during times of economic and financial uncertainty.

Long anticipated, or dreaded, the cashless society seems to be more or less here. In the eternal struggle between control vs. freedom, digital ledgers enable total control, while paper changing hands is an expression of freedom.

Digital blips are much easier for politicians and bureaucrats to create from thin air — since they ARE thin air! This throws all remaining pretense of fiscal responsibility — and government restraint — out the window.

They are destroying our currency in more ways than one: Debit Cards, Gift Cards, Apple Wallet, Direct Deposit, PayPal, Stripe, Venmo, Zelle, Google Pay, Square, etc. These are all systems to track and trace — mere blips in the ether.

Because of these systems, financial privacy is no longer a sacred right. In fact, if you value financial privacy it’s seen as a red flag that you might be a criminal, and you must have something to hide. What’s coming next? Microchip implants or biometric data from your unique palm as your ID, linked to payment systems? These new monetary technologies are always adopted for convenience, evolve to widespread dependence, but can easily be primed to be weaponized for authoritarian control.

And what about Central Bank Digital Currencies? Some have called CBDCs “programmable currencies,” meaning they can be programmed to only purchase certain approved items, could have an expiration date and accounts can be restricted with the same ease (and user frustration) as disabling a social media account. Possibly even for the same reasons (or lack thereof).

Gold and silver may be privacy’s last haven because precious metals can’t be printed into oblivion or arbitrarily cancelled. Gold and silver are not just tangible and rare, they are fair and honest. Throughout history, kings and governments have debased and devalued currencies in pursuit of wars and personal grift. Precious metals are one of the last lines of defense against this next monetary assault.

While silver has served as currency for thousands of years, it also plays a significant role in many industries. Silver is the world’s most conductive element and the most reflective metal on the planet. As a result, it plays a critical role in how we communicate, replicate, and initiate chemical reactions to advance technology and interconnectivity in the 21st century. This makes it, perhaps, one of the most vital components for modern innovation. Electronics such as LED lighting, touch screens and cellular technology require silver for every unit produced.

In less than two decades the electronics industry saw cell phones shrink from the size of a brick to a lady’s compact. The big screen TV — once big as an armoire — now hangs on the wall like a picture. And tablet computers have more power and storing capacity than an old file cabinet-sized mainframe. The common denominator among these innovations is silver.

Since 1999, the quest for green energy has been relentless. Innovations in solar technology have seen “sunlight to power efficiencies” increase nearly threefold. The cost of solar now rivals that of conventional energy. Solar is becoming the new oil. But, without silver, there would be no solar. As solar demand rises, so too should the demand for silver.

China may be about to prove it. Their historic shift to green energy is underway. With an intent to build 100 of these massive 250-acre solar farms, China alone could consume half of an entire year’s worth of silver production. And that’s just China. The state of California recently passed legislations to mandate solar energy for all new home constructions which went into effect in January 2020. In all likelihood, many other states will soon follow suit. Green energy is becoming a worldwide trend.

In addition, silver has numerous health benefits. For centuries, people have also used silver coated jugs and jars to store water and wine to ensure freshness but did not understand the science behind why silver was so effective. This wasn’t until scientists discovered that silver ions absorb oxygen, which kills bacteria. And, because it’s the least toxic metal to humans, silver is an ideal agent for water purification, bandages, dental hygiene, and even eye drops.

Industrial demand will continue needing silver. Much of this demand growth is expected to come from the solar industry. And, silver’s growing application in electronics, medicine, water purification, jewelry, even warfare, should increasingly cause stress on the low availability and lack of needed supply.

Relative to the price of gold, experts say silver may be undervalued and poised for a massive upward price correction. Because of its uses in industry, the price of silver is more closely tied to the economy. When economic disrupters from the pandemic subside, demand for silver should increase as well. Precious metals traders believe there are times when it is better to own one metal over the other and that there are times when it is prudent to trade one metal for the other.

To understand how this works, first take a step back in history. In 1792 our Federal Monetary System was created. Taking into consideration the weights of the variety of foreign coins in circulation, Alexander Hamilton, then Secretary of the Treasury, made recommendations for gold and silver coins of specific weights, content and purity. In studying the values set for foreign coinage, Hamilton observed that gold carried 15 times more value per the same unit of measure as did silver.

The silver to gold ratio was set at 15:1 with one ounce of gold commanding 15 ounces of silver. Since Biblical times, this ratio had been the standard based on the supply of the metals given to us by Mother Earth. But the monetary system of fair weights and measures, as established in 1792, has long since been debased by the elimination of the gold standard and the printing of paper money as well as changes in the supply of each. A dollar is no longer defined as a precise amount of gold or silver as they relate in value to each other.

Now, to analyze the price of silver relative to the price of gold, one has to convert the value of each metal to dollars first in order to visualize where each metal should be priced. In January of 1980, the value of silver to gold aligned with its historical proportion. Gold rallied to $850 an ounce and silver peaked to $54 an ounce — roughly 16:1 silver to gold. In March 2011, in the midst of a so-called economic recovery, that ratio was 38:1. At the time of this writing (December 2023), the ratio is sitting even higher around 84:1. This number seems so overextended that a mean reversion seems likely, which could send silver prices soaring. It is unlikely gold will fall from present levels as it currently trades at a price near what it costs to produce. The same can be said for silver. Thus, a metals portfolio weighted heavier on the silver side, today, may seem prudent.