Gold: The US Dollar Bank Run Is Speeding Up

By Hubert Moolman

Previously, I have shown how the US dollar banking system is in the midst of a bank run. We have entered the critical part of this bank run. The US dollar banking system has become too debased, and nations are running to an asset like gold as a reserve asset instead.

It can be described as very similar to the events since Nixon ended the direct convertibility to gold in 1971. In the Gold/Monetary Base chart (below) you can see currently how a similar pattern has developed to the 1971 end of convertibility.

The US central bank has no promise to pay any gold to holders of the US dollar, nor does the treasury have any gold obligation in lieu of bonds issued. However, pressure will be felt in the bond market (higher interest rates) and the US dollar devaluation, just like in the 70s, as the move from US dollar assets (including treasury bonds) to gold and silver is made.

If the 1971 Nixon event can be described as a default, then it is highly likely that we could soon see something similar where gold and silver are held for future delivery (like COMEX, for example).

Bank runs are unpredictable and can be very disorderly, so be prepared, especially since it is almost certain that this time we will see an actual US sovereign debt default. We are starting to see the chaos in the gold and silver market, and this will likely only speed up in a similar manner to the 1979 gold and silver rally, when prices went vertical.

The close comparison to the 1979 rally can be seen in this chart:

I have marked out two patterns that show how the recent breakout puts gold in the acceleration phase of the bull market.

Both patterns start at the Dow/Gold ratio peak (1966 and 1999 respectively). After the Dow/Gold ratio peaks, gold went on strong bull run, which continued even after the 1973 and 2007 Dow 

peaks , respectively.

After the peaks at point a, the chart formed a cup-type pattern. During this consolidation (the cup) there was a secondary Dow/Gold peak and also interest rates made an important low.

The structure of the 1970s pattern was such that after the bottom (point b) during the cup phase, price moved relatively slowly up at first, but once it broke out at the red line it moved up quite fast. Even current geopolitical risks (as they relate to the US dollar) suggest that this is plausible.

The current pattern is following that same type of progression. The move since the low of the cup phase (point b) has been slow, and now that price finally broke out at the red line (in 2024), we are seeing an accelerated increase in price.

Warm regards
Hubert Moolman