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September
30
2023

The Costco Gold Indicator
QTR's Fringe Finance

Can we all agree that once it becomes common knowledge just how ridiculous Modern Monetary Theory is, it'll be a treacherous day for the confidence that Americans place in the Fed?

All I do is write about the Federal Reserve. I've been talking about them for the last 15 years nonstop and have constantly been skeptical of monetary policy in this country. This policy can best be described as a combination of Sam Bankman-Fried's and Bernie Madoff's management styles—combined and on a sovereign scale.

Putting aside whether or not I'll eventually be proven right with my skepticism, or if I am engaging in a lifelong, fruitless campaign against the world's most successful monetary policy (like I give a sh*t), the one catalyst I have always considered devastating to the central banking model is the public's awareness of just how it works.

Make no mistake about it: inflation and corporate bailouts that widen the inequality gap are definitely horrifying. What makes it more nefarious, I have argued, is the fact that most people don't understand how it happens. This takes place in the "dark machinery of the night," to borrow some imagery from Ginsberg.

And if there's one thing I've given Bitcoin credit for over the last decade, it has been empowering the younger generation to understand how central banking and fiat currency work. Regardless of whether or not Bitcoin turns out to be a successful investment, I have not witnessed such an effective tool for empowering people with the knowledge of how central banking works as I have with Bitcoin.

I would also argue that the nation has never been in such a precarious and questionable spot with its monetary policy decisions as it is right now. Make no mistake about it: this is uncharted territory. We are dealing right now with the consequences of two decades of easy-money policies that should have been corrected years, if not decades, ago. There are multiple forces at work here, like a rip current underneath a raging storm tide, pulling in multiple directions.

First, we have a $7 trillion liquidity bomb pumped into the system as a result of Covid and its related stimulus. Then, we have the fastest acceleration of interest rates to the highest federal funds rate we have seen in decades. Rates across the board, including mortgage rates, have hit multi-decade highs in record time.

In addition, we have a stock market that appears to me to be insanely overvalued and priced purely for speculation.

So what's the point of all this? Am I going to once again tell you that the entire system is going to come crashing down and all life as we know it will stop at the speed of light, like when they crossed the streams in "Ghostbusters"? No. But I do think it is noteworthy that people understand that central banking policies are being called into question publicly a little bit more than they have in the past. For example, in Congress days ago, Matt Gaetz made the following joke:

"We are devaluing American money so rapidly that in America today, you can't even bribe Democrat senators with cash alone. You need to bring gold bars to get the job done, just so the bribes hold value."

Putting aside what you think about him or the Republican party, the soundness of our money is an infrequently discussed topic in the halls of Congress. The issue has also been brought up repeatedly by presidential candidate Vivek Ramaswamy, who is running on a platform of reducing the amount of power granted to the Federal Reserve.

But finally, there has been a true test of consumer demand for skepticism of monetary policy with Costco recently selling gold bars. That's right—a retail outlet is actually selling real money.

Just think about this for a moment: people are buying gold from Costco. This tells us that the average American has grown so weary of our government's reckless spending and the Fed's irresponsible monetary policy that they literally want to fill their shopping cart — online or in person — with something they know is real money. From People:

The retail giant has recently been selling 1 oz. bars of authentic 24-karat gold from South African mining company Rand Refinery and Swiss precious metal supplier PAMP Suisse on their website for $1,949.99 and  $1,979.99, respectively, according to Insider.

According to the product details on Costco’s page, Rand Refinery’s gold bars are individually stamped with a unique serial number and arrive in a sealed black assay card, while PAMP Suisse’s gold bars are individually “controlled, registered, and secured” within CertiPAMP™ packaging with an official Assay Certificate and a digital certificate accessed with a QR Code. 

Both items are non-refundable, provide air shipping via UPS and currently have a 4.9 out of 5 average rating on the company’s website, with one member writing on Rand Refinery’s gold bar customer rating that it was a “beautiful piece of gold” and “brand new.”

It's an incredible commentary on the average American citizen. Americans are literally choosing to transact U.S. dollars for gold.

Just because it's happening on a website that says "Costco" and the transaction is being consummated by housewives named Florence doesn't change the fact that enough people thought converting U.S. dollars into hard assets was a high enough priority that these bars sold out at Costco. These aren’t shoppers heading over to Kitco — these are people casually picking up some gold when they buy dog food and toilet paper.

And if you think that's crazy now, wait until we hit a period of volatility. So far, markets have been pretty orderly, but it's a mathematical certainty that this won't continue to be the case. These gold bar purchases will look like when I was early on Covid and buying face masks at stores like Sherwin-Williams and hand sanitizer at my local Aldi. Just weeks later, people were beating each other up in grocery store aisles for toilet paper.

If you think the same "oh sh*t" moment can't happen with gold and other types of real money, you're sorely mistaken. '

To gauge the average American citizen's trust in our fiscal and monetary policy, look no further than what's going on at Costco.

QTR’s Disclaimer: I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning. This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. These positions can change immediately as soon as I publish this, with or without notice. You are on your own. Do not make decisions based on my blog. I exist on the fringe. The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can’t guarantee I am right; I write these posts after a couple beers sometimes. Also, I just straight up get shit wrong a lot. I mention it twice because it’s that important.

“Fringe Finance” is a collection of my thoughts and investment decisions, mixed with content that I personally curate from sources who write both exclusively, and non-exclusively, for the blog. My personally written content is rarely found anywhere else and the curated content I provide is from people and organizations I read frequently and respect as truth tellers, and sometimes just as irreverent iconoclasts. 

Both myself and the people I read are not afraid to challenge the mainstream narrative or succumb to it when it serves the collective best interests of identifying objective truths on complex, important or fringe topics - the areas where the mainstream media and mainstream finance won’t shine lights. It was this type of courage to go against the mainstream that led to many of us getting ahead of the pack in late 2019/early 2020 before Covid become a nation-wide hysteria and crashed markets. 

I have spent years reading news that, in my opinion, often missed the point and buried the lede. Up until a couple years ago, I just thought it was because the mainstream media needed to be careful. Now, it has become clear that it is likely due to the mainstream media and financial media’s purpose to drive a narrative which serves the interests of a small minority, rather than the common citizen. 

While inevitably, sometimes what I post may not be correct or turn out to 100% be the objective truth, I find that discourse is the most important part. In other words, at least the items will be up for discussion. And most importantly, I trust my readers to take the facts on their own and draw their own conclusions.

Nothing on this blog is investment advice, life advice, political advice or otherwise. Do your research elsewhere and consult your personal financial advisor and/or therapist with any issues. Please leave me alone.

Oh, and welcome to the fringe.

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