Gold’s Minsky Moment – Richard Mills

2024.08.10

A “Minsky Moment” refers to a point in time when a period of bullish speculation leads to a spectacular market crash.

Named after economist Hyman Minsky, the theory centers around the inherent instability of stock markets.

“Minsky held that, over a prolonged period of prosperity, investors take on more and more risk, until lending exceeds what borrowers can pay off from their incoming revenues. When over-indebted investors are forced to sell even their less-speculative positions to make good on their loans, markets spiral lower and create a severe demand for cash — an event that has come to be known as a ‘Minsky moment.”– The Levy Economics Institute of Bard College

AOTH asks, “Is the current US stock market, and global economy, approaching a Minsky Moment?” If so, precious metals gold and silver will surely go ballistic in the aftermath of the collapse.

The intellectual challenge is identifying the metaphorical pin that pops the bubble, which investors, banks and governments have been happily inflating.

I’ll pinpoint some catalysts that could lead the global, and US economy down a road of economic ruin:

A collapse in ocean freight shipping rates;

“Fake” good news that is masking serious problems in the US economy, like a lack of business investment;

Record share buybacks that enrich management not companies nor their shareholders;

Any number of “white swan” geopolitical risks – hotspots that could at any time boil over into a conflagration that destabilizes the fragile global economy;

US tariffs on all the products its domestic industries can’t compete against;

US loses its “exorbitant privilege” as the reserve currency.

The truth of the matter though, is these are all symptoms of a bigger, much more insidious disease, and that is paper money – more specifically, piles and piles of consumer, business and government debt that has been allowed to accumulate, without consequences, under our fiat/ paper monetary system.

Gold’s Minsky Moment will come when everyone realizes that the paper monetary system, and its reserve currency the US dollar, has no intrinsic value, and therefore can no longer be trusted – when money is worth nothing but the paper it’s printed on, and previously rejected gold and silver re-emerge as currency backstops.

Richard (Rick) Mills
aheadoftheherd.com
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