Early in the interview, Peter laments the possibility that the United States will decline economically. China is poised to surpass our economy as the dollar continues to weaken:

“I think the media is constantly writing China’s obituary. And I think they’ve got it wrong. Just like they downplay the significance of the problems in the US economy, they overplay the significance of the problems of the Chinese economy. I’m not saying it’s perfect over there in China. But I think they have a lot going for them that people are overlooking.”

Michael and Peter discuss the role of U.S. foreign policy– specifically having a military presence around the world– in driving up deficits and the debt:

“We’re all over the world. We’ve got our troops all over the world, but we can’t afford to deploy them. We can’t afford to provision them without borrowing money, and that is not sustainable. I mean, it’s going to crumble. I don’t think the world is going to pay an ever-increasing tribute to the United States to maintain this situation. I think it’s going to come to an end. Yes, it’s gone on for a long time, and our military has probably been part of what’s enabled it.” 

With tension in the Middle East ratcheting up this week, Peter delivers a masterful explanation of why wars are terrible for the economy. The temptation to inflate combined with the physical destruction of productive goods mean wars inevitably impoverish all involved:

“You’re more likely to debase your currency with a war, and it’s actually twofold, depending on how big the war is. Wars can result in the destruction of goods, and there’s a destruction of productive capacity. So, you have less supply of goods in a war. A lot of times, if it’s a big war, you have to produce ammunition and military hardware at the expense of civilian consumer goods. So, wars tend to reduce the supply of consumer goods but increase the quantity of money. Governments today don’t want to pay for wars. They don’t want to tell the taxpayer, ‘We’re fighting a war, so we’re raising your taxes.’ … And they go out and borrow, creating bigger deficits. So, the Fed has to print more money.”

The trio also discusses Peter’s opinions on investments other than precious metals, including stocks and crypto. He argues that Bitcoin highlights the difference between large institutional investors and retail investors trying to cash in on a trend:

“Bitcoin peaked out in November 2021, and priced in gold, it’s almost 40% below that peak. Despite all that money spent, all that hype, all those ETFs in the market, all that institutional buying. So that tells you something. It tells you there’s a lot of people that have been selling their Bitcoin into all the hype. And I think the people selling Bitcoin are a lot smarter and know a lot more than the people who have been buying it.”

Peter is optimistic for the future of gold. With no end in sight for the Fed’s money printing, there’s a distinct possibility that gold’s price could increase by many multiples over the next couple of decades:

“I think the potential is much higher because we’re going to print so much money. We’re going to have so much inflation that the dollar is going to lose a lot of value, and you’re really going to need a lot of dollars to buy gold. If gold can go from $20 an ounce to $2,600 an ounce, it can go from $2,600 to $26,000, or even to $100,000. There’s no limit because, again, gold isn’t changing—it’s the value of the dollar that’s decreasing.”

Halfway through the interview, Peter also drops some trivia about his wife, Lauren. Did you know she both sang and acted in a 2022 Bruce Willis film? Check out the full recording (starting at 38:30) for the details!

If Treasury markets can’t be reigned in, the Fed expands its balance sheet by buying those Treasury securities to add liquidity and stability. These “open market operations” are usually the “money printing” that people are talking about happening at the Fed. “QE” refers more specifically to operations where the Fed is buying other assets beyond just Treasury securities, as occurred in the 2008 crisis and during COVID. But the Treasury buying back its own issued debt is, in essence, QE by another name.

When interpreting Treasury yield data, remember that this market is being heavily manipulated by Yellen – she's conducting the Treasury versions of both Operation Twist and QE, w/ overreliance on short-term issuance and now buybacks; term premium is now virtually nonsensical: pic.twitter.com/RH8UixQOMK

— E.J. Antoni, Ph.D. (@RealEJAntoni) May 1, 2024

While this occurs outside the halls of the Federal Reserve itself, Treasury buybacks are merely a different way to print money from nothing. The US is running a deep, sustained fiscal deficit with no true debt ceiling — so the Treasury buys back its own securities by issuing new debt, which it creates out of thin air. With spending far exceeding revenue, higher interest rates plus more debt means that fiscal deficits accelerate. The short-term stimulative effect of this somewhat offsets the Fed’s tightened monetary policy but digs a deeper hole in the longer term.

One method the Treasury uses is to shorten the average duration of securities so that debts mature sooner. That means more short-term debt (like Treasury bills) versus long-term debt (like Treasury bonds). This encourages more capital flows into the banking sector and helps stave off instability. If it fails, the big banks still win: when smaller banks fail, they’re usually just absorbed by bigger ones where the profits are private but the losses are socialized. The “Too Big to Fail” club becomes even bigger and more powerful.

When the Treasury issues more short-term debt, it’s waging war on the Fed’s higher interest rate policy. Both the Treasury and Fed need to keep Treasury yields down, but tightened monetary policy encourages higher yields. If yields get too high, the bond market — and challenged industries like commercial real estate that rely on debt — are screwed. So while the Fed tightens, the Treasury must loosen. Yields have since gone down, but if inflationary pressures and other factors push them back past 5%, both the Fed and Treasury are trapped.

“Higher for longer” policy at the Fed is even more essential for holding back inflation as the Treasury injects liquidity into markets. If the Fed lowers rates now, the results of simultaneously expansionary monetary and fiscal policy will send consumer prices soaring.

So are the Fed and Treasury in opposition, or are they working together, one changing its policy to prevent a disaster caused by the policies of the other? The answer is complex, but the oversimplified version is that the two have locked the economy into a game of musical chairs where, eventually, the music is bound to stop.

The end result of the Treasury’s showdown with the Fed will still be out-of-control inflation. Both artificially contract and expand the money supply, and their policies have both created an inescapable trap. COVID QE is one big unexploded bomb that is sitting in the center of that trap. And even with the Fed holding off on interest rate cuts in the short term, the Treasury’s buybacks are QE by a different name. With too much inflationary pressure and not enough tools to stop it, the end result of all this fiscal and monetary tinkering will be a disaster for the dollar.

It’s a curious situation when Jerome Powell, a man who oversaw the largest money-printing campaign in American history, is saying that the debt is unsustainable. While maintaining that the Fed “tries hard not to comment on fiscal policy,” Powell’s suggestion for handling the debt shifts blame and burden from money printing to fiscal irresponsibility on the part of policymakers.

While they have their part to play, and it’s a big one, it’s interesting to see that Federal Reserve monetary policy hasn’t been mentioned in any of Powell’s ‘urgent’ warnings about ballooning debt:

“In the long run, the U.S. is on an unsustainable fiscal path. The U.S. federal government’s on an unsustainable fiscal path. And that just means that the debt is growing faster than the economy. So, it is unsustainable. I don’t think that’s at all controversial. And I think we know that we have to get back on a sustainable fiscal path.”

It’s a wonder how, even if the government suddenly adopted responsible spending and budgeting, we would be back on a path of true sustainability after Powell oversaw the printing of over 3 trillion dollars in 2020 alone. The Fed is an interesting source of criticism for unsustainable debt, to say the least:

More loans and more deposits will increase M1 in an already-frothy inflationary environment, adding pressure to a pot that’s already in danger of boiling over from money printing during Covid. Post-COVID rate hikes have not even come close to reversing this course, with interest still far lower than it would be in an actual free market, where a few dozen bureaucrats would no longer be pulling the levers. Excessive borrowing makes US Treasurys less attractive as doubts begin to mount that the US will be able to pay its obligations back, decreasing demand for our debt and fueling further challenges for funding the government.

All of this led Fitch and Moody’s to downgrade the US’s credit rating last year, from “AAA” to “AA+” in the case of Fitch, and for Moody’s, from “stable” to “negative.” Fed interest rate hikes without an accompanying plan to reduce spending or increase revenue leave no hope at all for meaningfully reducing fiscal deficits.

From this new sense of urgency, lawmakers in Idaho and Wyoming have called for a convention of states to address the problem, with Idaho’s resolutions calling for a possible constitutional amendment limiting the spending abilities and overall power of the federal government. Idaho’s Senate Concurrent Resolution 112, or SCR 112, calls for, in its words:

“(1) imposing fiscal restraints on the federal government; (2) limiting the power and jurisdiction of the federal government; and (3) limiting the terms in office for its officials and for members of Congress. Currently, identical applications have been sent to Congress by other state legislatures.”

The question remains if anything, at this point, would be enough to get the US back on a genuinely sustainable economic track other than an outright collapse of the US dollar leading to a total monetary reset. As long as the Fed exists, the likelihood of truly reigning in out-of-control debt is nothing but a pipe dream.

With recent new all-time highs for gold and bitcoin in response to the debasement of the debt and central banks locked in a buying spree that is likely to last years, the message is clear that the banking system agrees with Peter Schiff that inflation is far from over.

Interestingly, the real driving force behind gold’s price increase appears to be foreign central banks, which have been significant buyers of the metal. This shift towards gold by central banks is seen as a strategic move away from holding U.S. dollars, signaling a broader trend of de-dollarization among global financial institutions. These developments come at a time when retail interest has been diverted towards more speculative investments like cryptocurrencies, overshadowing traditional safe havens like gold.

The lack of public participation in the gold rally, coupled with the substantial interest from central banks, presents a unique contrarian opportunity for investors. While gold stocks, such as those of Newmont Mining, have experienced volatility, the physical commodity’s price resilience underscores gold’s enduring value as a monetary asset.

This divergence offers insightful lessons on the dynamics of investment psychology and market trends, emphasizing the importance of looking beyond mainstream narratives to understand the underlying factors driving market movements.

The recipe for GDP growth is a recipe for disaster

The big factor driving the GDP was the increase in government spending. Well, where’s the government getting this money? It’s borrowing it! That’s not a recipe for economic growth — that’s a recipe for disaster!”

Spending increases caused massive increases in national debt and liabilities.

The US national debt currently stands at $34.1 trillion. Total unfunded liabilities tower in the hundreds of trillions, mostly from Social Security and Medicare.

Peter states that this used to be a priority, but is no longer:

Back in the 1980s, 1990s we were still pretending we were going to do something about entitlements —about Social Security, about Medicare, that there was going to be some effort to fix the problem before it blew up… Nobody at this point believes that we’re going to do anything about stopping the bomb from going off. In fact, it’s already gone off. We’ve already passed the point.”

Social Security is officially broke

Social Security trust funds are now liquidating their treasury holdings, putting a massive net drain on the US treasury.

And it’s getting worse:

[The] drain is getting bigger every day as more people retire whether voluntarily or involuntarily and more people just drop out of the labor force and stop paying taxes.”

Peter explains that many roles are being replaced by AI and automation tools, which don’t help the Social Security fund:

They’re not going to be paying Social Security taxes. Computer programs don’t have to pay into FICA. This this is going to get bigger but given the fact that we have this huge hole in Social Security, we’re bleeding — we’ve got a massive deficit that’s running out of control.”

Peter projects a total depletion of Social Security reserves within the next few years.

Making matters worse, manufacturing has been in recession

This confounds the administration’s narrative of a healthy economy:

They keep talking about a “Manufacturing Renaissance.” They got the “r” right, except it’s a recession instead of a renaissance.”

The Fed Philly Manufacturing Index has been negative for 18 out of the past 20 months, a manufacturing dark age.

This all begs the question:

How can you talk about a great economy? How healthy can the economy be when a vitally important part, the goods-producing sector, has been in a recession for almost two years?”

There are signs of higher inflation to come

Peter points out that just this week, oil prices rose $5 a barrel and the M2 money supply increased a whopping $100 billion, a significant expansion.

Plus, the Fed won’t deny voters anything this election year.

Peter concludes:

I’m correct that inflation is going to be picking up, it’s going to be weakening the economy. We could see a more meaningful turnaround. Maybe we’ll even get the government to come back and officially acknowledge that we’re in a recession.”

It’s as if the Fed is asking the healthiest swimmers to don faulty life jackets first, in a bid to make them seem less alarming to those already struggling to stay afloat. Our guest commentator explains why this strategy, while intended to fortify the banking sector against future storms, would endanger all US banks.

The following article was originally published by the Mises Wire.

Last Thursday, Bloomberg reported that federal regulators are preparing a proposal to force US banks to utilize the Federal Reserve’s discount window in preparation for future bank crises. The aim, notes Katanga Johnson, is to remove the stigma around tapping into this financial lifeline, part of the continuing fallout from the failures of several significant regional banks last year.

This new policy is reminiscent of the Fed’s actions during the 2007 financial crisis, where financial authorities encouraged large banks to tap into the discount window, taking loans directly from the Federal Reserve, to make it easier for distressed banks to do the same. The hesitancy from financial institutions to tap into this source of liquidity is justified. If the public believes a bank needs support from the Fed, it is rational for depositors to flee the bank. The Fed’s explicit aim is to provide cover from at-risk banks, trying to hold off bank runs that are an inherent risk in our modern fractional reserve banking system.

By strong-arming healthy banks to comply, the Fed is escalating moral hazard and leaving customers more vulnerable. They are deliberately trying to remove a signal of institutional risk.

The regulator’s concerns about bank fragility are justified. The Fed’s low-interest rate environment meant financial institutions seeking low-risk assets bought up US treasuries with very low yields. As inflationary pressures forced rates upward, the market value of these bonds decreased in favor of new, higher-yield bonds. It was this pressure that sparked the failure of Silicon Valley Bank last year.

Additionally, the state of commercial real estate is a further stress for regional banks, which are responsible for 80 percent of such mortgages. In the previous low-interest rate environment, investors viewed commercial real estate as “a haven for investors in need of reliable returns.” Unfortunately, this same period experienced major changes in consumer behavior. Online shopping, remote work, and shared office space increased at the expense of traditional brick-and-mortar locations. Covid lockdowns only further amplified these trends.

As a result, commercial real estate debt is viewed as one of the most dangerous financial assets out there today, sitting right on the balance sheets of regional banks across the country.

These stresses have had a major impact not only on this latest policy from federal regulators but the depth of their response to last year’s failures. Following the failure of SVB, the Fed created the Bank Term Funding Program, which allowed banks and credit unions to borrow using US Treasuries and other assets as collateral. This emergency measure reflected fears of other banks being at risk. The Fed has signaled its willingness to let this program expire in March, with the aim of transitioning banks to increasing their use of the discount window.

While the actions of the Fed and financial regulators illustrate real concerns about the health of US banks, these same institutions have projected bullish optimism about the state of the economy in public. Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen have consistently described the US economy as “robust” over the last few months, a view not shared by the majority of Americans. Additionally, Powell proclaimed victory over inflation this past December, even while the Fed’s preferred measures remain well above their 2 percent target, in stark contrast to his previous statements about the necessity to aggressively tackle inflation at the risk of it becoming normalized.

The shadow of politics obviously can’t be decoupled from the rosy statements from government officials on the economy, particularly going into a presidential election year. Another motivation for projecting economic strength, however, is to re-arm the Federal Reserve’s policy arsenal. While the projections of Fed officials for rate cuts in 2024 have been packaged as reflecting the growing strength of the US economy, the reality is that the Fed desires the option to lower rates as a response to financial distress. The Fed has proven time and time again that if given the choice between forcing Americans to suffer from the consequences of inflation or bailing out the financial system, it will choose the latter.

With the 2024 election in full swing, Americans will be consistently bombarded with political lies and false promises, not just from politicians but from government agencies and the central bank. While we can expect another ten months of being told how strong the economy is, the actions being taken behind the scenes tell a very different story.

“On a year-to-date basis, central banks have bought an astonishing net 800t, 14% higher than the same period last year.”

Whether or not The January Effect will apply to the gold price as we finish the first month of 2024, there are plenty of indicators that the central bank buying spree will continue for at least the first half of the new year. Accelerating de-dollarization is just one factor, as powerhouses like China and Russia continue strategically moving further and further from the grips of USD hegemony.

Of course, actions by the Biden administration to isolate Russia with sanctions in the wake of the Ukraine conflict only provide further impetus for the Russians to continue divesting in any way they can from the US dollar. Combined with a volatile ruble and a wave of new American spending to feed its proxy wars in Ukraine and Israel, it only makes sense that Russia’s gold coffers will continue to grow.

You can also bet on China and Russia buying significantly more gold than what gets reported publicly, so the real numbers are always higher than they seem. As Jim Richards has pointed out many times, such as in this tweet from Q1 last year, countries like Russia and China hold gold acquired through off-the-books buying programs that far exceed what they officially claim:

“Central Bank of Russia reported a gain of 30 metric tonnes in its gold reserves. That’s after a year of flatlining more likely due to non-reporting than non-acquisition. Nice to see Russia back in the game.”

For more central bank gold-buying fuel, the Fed, claiming victory against inflation, has actually given up on fighting it. The Fed knows it backed itself into a corner and has no choice but to lower rates in 2024 — which means central banks will need a way to hedge against those easier money policies. And while the Fed’s balance sheet shrank in 2023, it didn’t even come close to closing the gap created by the trillions it added during the Covid era. Of course, that wouldn’t stop Powell from running his victory lap at 2023’s final post-FOMC press conference about stopping rate hikes:

“That’s us thinking we’ve done enough.”

However, lower rates in 2024 would bolster the case for even more inflation, not less — leading to a tanking dollar and surging relative prices for gold and other commodities. Peter Schiff isn’t the only one to have pointed this out, but all you have to do is forget what central banks say and look at what they do. The stage is set for banks to add more gold to their reserves to hedge against downward pressures on the dollar, even as the Fed claims victory over the inflation battle. The only question is which will occur first: a dollar crisis or a sovereign debt collapse? Central bankers aren’t going to wait to find out.

It's only the 2nd day of Jan. and the #NationalDebt already blew past $34 trillion. I think 2024 will set a record for the largest one-year increase in the U.S. National Debt in history. The only question is will there be a sovereign debt or #dollar crisis before the year ends.

— Peter Schiff (@PeterSchiff) January 3, 2024

After all, in 2023, not even higher nominal yields managed to slow down gold’s rally. Booming Treasury yields reflect less certainty in the health of the economy, not more, as investors flee to the perceived safety of Treasurys and bonds. But what goes up must come down, and a collapse in the Treasurys market would nuke the dollar, taking the rest of the economy with it:

“…a Treasurys crash will force the value of the dollar to plunge, which will lead to a brutal economic downturn — one in which the “standard of living” in the country will drop dramatically.”

Finally, 2024 brings even more uncertainty in the face of the US’s continuing proxy conflicts and, notably, a US presidential election that is reinforcing a global picture of domestic political instability. With candidates on both sides like RFK Jr. and Vivek Ramaswamy embracing anti-establishment messages about reigning in central banks, the military-industrial complex, and the US debt spiral, there are plenty of candidates shaking the nest in ways that would have been unheard of just a couple elections ago. As Robin Tsui of the South China Morning Post points out, somewhat obviously:

“…the potential for US government shutdowns, fiscal policy debates, and political stand-offs ahead of the 2024 US election cycle persist.”

It’s true that many economists and Fed officials haven’t given up hope for a ”soft landing” next year, which would imply decreasing demand for gold. But as time has pressed on, this is a claim that even they admit could end up being proven hollow. To any honest observer, more signs of instability, inflation, negative-yielding debt, and election-year madness all point to a strong need for safety throughout this year. 

Looking past the claims that US bankers and officials are making in public, central banks know the truth: they need to keep gobbling gold. It’s the only strategic maneuver that makes sense, with few other meaningful ways to protect themselves from becoming collateral damage in the confluence of self-destructive economic meddling, overstretched foreign entanglements, and election-year political turmoil in the US.

Price increases on essential goods like food, housing, and fuel are hitting hard for Average Americans. But in its policy to avoid economic reality as much as possible, the Fed’s CPI numbers don’t account for factors such as consumers buying cheap alternatives instead of the name brands that they used to easily afford.

Acting as de facto PR agencies for Federal Reserve monetary policy, some media outlets are claiming that Americans are making headway on their debts, it’s just that higher inflation is obscuring all their great progress. As described by WalletHub editor Christie Mathern:

“When you adjust for inflation to compare this number to past years, our current credit card debt total is actually 15% lower than the highest number in 2008.”

According to that analysis, crippling price increases are causing consumers to take on more loans, but the debt only seems too high because each dollar is worth so much less now than it was 15 years ago. Unfortunately, the economy is now so irreparably distorted that these perceptions of economic pseudo-reality have become the norm. Increasingly severe mental gymnastics are required to continue justifying the position that consumer debt has reached anything but utterly unsustainable levels.

Meanwhile, trillions printed during Covid are still in the economy, meaning inflation will only get worse as Powell waves his magic wand to cut rates in the hopes of “stimulating growth.” If you believe that more debt automatically equals more growth, then Powell might be right. But the real result will be higher prices at the store, more consumer debt, and more previous debts left unpaid. According to a Bankrate survey, over 50 million Americans are carrying credit card balances for an entire year and then some, and other numbers show that around half of consumers are carrying balances from month-to-month.

“Total credit card balances hit a high of $1.08 trillion in the third quarter of 2023, according to the Federal Reserve Bank of New York — a figure that is up $48 billion over the quarter and $154 billion over the year. Interest on this debt is also increasing, with the Federal Reserve reporting the average APR for revolving credit at 22.77 percent as of the third quarter.”

One has to wonder if maybe consumer defaults are the goal. Perhaps “economic growth,” in the Fed’s eyes, really means crashing it all so that more assets like real estate can be owned by parasitic megabanks. However, the simpler explanation is that backed into a corner with so few weapons in their arsenal to meaningfully stabilize prices or get debt under control, there isn’t much else that the Fed can do other than more of the same.

Delinquencies are already at their highest point in about a decade, and the notion that these debt-addicted spenders are going to borrow less rather than more appears quite unlikely in 2024. Lower interest rates will be too tempting when cash-strapped consumers are already struggling more than ever just to afford rice and beans:

As Peter Schiff tweeted on January 11th, there’s unfortunately no end in sight for consumers who are already borrowing just to finance basic needs.

Anyone who thinks the #Fed will succeed in returning #inflation to 2% doesn't understand inflation, including #Powell or other FOMC members. Today's hotter than expected Dec. #CPI doesn't mean that the Fed has to fight harder to win the inflation war, but that it's already lost!

— Peter Schiff (@PeterSchiff) January 11, 2024

As he said on last week’s The First TV with Jesse Kelly:

“Americans continue to borrow to buy things that they don’t earn enough money to afford, and all that means (is) more upward pressure on prices — the Fed has done too little, too late…we’re running a trillion dollars in debt every quarter.”

But if the job numbers pick up, maybe consumers can afford more expensive survival needs and finally start paying down those debts…right? Not so fast. 2023 was a big year for layoffs, especially in an overly-frothy tech industry suffering further disruption by AI. And ResumeBuilder.com’s recent survey found that almost half of companies are anticipating more job cuts in 2024.

Making matters worse, over 1 out of 4 debtors (especially Millennials and Gen Z) are already saying YOLO and “Doom Spending” their way into an even deeper hole. That’s more than 25% of American consumers throwing in the towel, borrowing like there’s no tomorrow, and all but guaranteeing default at one point or another.

The only question left is when we’ll reach the debt event horizon that sucks the economy into a black hole of runaway inflation and cascading defaults. If the Fed is good at one thing, it’s kicking the can down the road — but at some point, that road leads to a cliff, and from there, there’s nowhere left to go but into the void.

So, how is this victory over inflation working out for the average person? Not so great.

Based on official CPI data, price inflation has cooled somewhat, although it remains far above the Federal Reserve’s 2% target. That hasn’t stopped President Biden and most of the mainstream financial media from declaring victory over rising prices. Biden even suggested that companies should start cutting prices since inflation is falling.

It’s important to remember that even if we believe the government numbers and price inflation is cooling, that doesn’t mean consumers are getting any relief.

Prices are not falling. They’re just going up slower than they were six months ago.

And those price increases are cumulative. Since January 2022, prices have risen 9.7% based on the CPI. And the CPI is designed to understate rising prices.

In other words, we’re all still coping with much higher prices no matter what the latest CPI report says. And the suffering is far worse than sterile BLS reports indicate.

This becomes clear when we go out in the real world and stop listening to news people spouting government numbers.

Ironically, we can learn more about the actual impact of inflation from the movie Home Alone than we can from some guy on CNBC droning on and on about the CPI.

In this 1990 classic, 8-year-old Kevin McCallister’s family went on a holiday trip to Paris and accidentally left him alone in his house. Chaos ensues.

You may recall that after realizing he’s alone, Kevin makes a trip to the grocery store. After all, a kid has to eat.

Kevin bought a basket full of groceries including a half-gallon of milk, orange juice, Wonder Bread, a Stouffer’s frozen turkey dinner, toilet paper, Snuggle dryer sheets, Tide liquid laundry detergent, plastic wrap, Kraft macaroni and cheese, and a bag of army men. He paid a grand total of $19.83 with a $1 off coupon for the orange juice.

In 2022, that same basket of groceries would have cost around $44.40 based on a shopping trip by a West Virginia mother. That’s a 123.9% increase. (Keep in mind prices vary somewhat depending on the store and location.)

This year, Kevin would have to fork out a whopping $72.28 for his provisions at a Chicago store. That’s another 62.8% increase in just one year. Since 1990, the price of Kevin’s groceries has gone up over 264%.

So much for that 3.1% CPI.

This just goes to show that real-life price inflation is far worse than the official numbers indicate.

China continues to be the biggest gold purchaser. The People’s Bank of China added another 23 tons of gold to its hoard in October as it expanded its official reserves for the 12th straight month.

Since the beginning of the year, the People’s Bank of China increased its reserves by 204 tons, and it has added 255 tons since it resumed official purchases in November 2022. As of the end of October, China officially held 2,215 tons of gold, making up 4% of its total reserves.

Most people believe the Chinese hold even more gold than that off the books.

There has always been speculation that China holds far more gold than it officially reveals. As Jim Rickards pointed out on Mises Daily back in 2015, many people speculate that China keeps several thousand tons of gold “off the books” in a separate entity called the State Administration for Foreign Exchange (SAFE).

Last year, there were large unreported increases in central bank gold holdings.  Central banks that often fail to report purchases include China and Russia. Many analysts believe China is the mystery buyer stockpiling gold to minimize exposure to the dollar.

The Central Bank of Turkey also made another big gold buy in October, expanding its holdings by 19 tons. Even with big purchases over the last several months, Turkey is still a net seller on the year.

The Turkish central bank sold 160 tons of gold last spring but returned to buying in the third quarter. According to the World Gold Council, the big gold sale earlier this year was a specific response to local market dynamics and didn’t likely reflect a change in the Turkish central bank’s long-term gold strategy. It sold gold into the local market to satisfy demand after the government imposed import quotas in an attempt to improve its current account balance. The country is running a significant trade deficit.

Although the Turkish government reinstated gold import quotas in early August, so far we haven’t seen a repeat of sales into the local market to meet elevated demand.

The National Bank of Poland also continued its recent gold-buying spree, expanding its reserves by another 6 tons. Its gold holdings have now risen by over 100 tons this year.

In 2021, Bank of Poland President Adam Glapiński announced a plan to expand the country’s gold reserves by 100 tons. Now that it’s reached that gold, Glapiński indicated it will continue to add gold to its holdings.

This makes Poland a more credible country, we have a better standing in all ratings, we are a very serious partner and we will continue to buy gold. The dream is to reach 20 percent.”

When he announced the plan to expand its gold reserves, Glapiński said holding gold was a matter of financial security and stability.

Gold will retain its value even when someone cuts off the power to the global financial system, destroying traditional assets based on electronic accounting records. Of course, we do not assume that this will happen. But as the saying goes – forewarned is always insured. And the central bank is required to be prepared for even the most unfavorable circumstances. That is why we see a special place for gold in our foreign exchange management process.”

Other significant gold buyers in October included:

• India — 3 tons
• The Czech Republic — 2 tons
• The Kyrgyz Republic — 1 ton
• Qatar — 1 ton

There were two notable gold sellers in October.

The Central Bank of Uzbekistan sold 11 tons of gold during the month. The National Bank of Kazakhstan also continued its recent selling, lowering its reserves by 2 tons.

It is not uncommon for banks that buy from domestic production – such as Uzbekistan and Kazakhstan – to switch between buying and selling.

October’s buying came on the heels of the second-highest third-quarter total of central bank gold buying on record, only coming in behind Q3 2022.

The World Gold Council said it’s “all but certain that central banks are on course for another colossal year of buying,” after a record-setting 2022.

The strength of buying has, to some degree, exceeded our expectations. While we were confident that central banks would remain net purchasers in 2022, we thought it unlikely that it would match last year’s record buying volume. Should buying continue to be strong in Q4, the full-year total could get closer than we anticipated. Nevertheless, the historically high level of buying in Q4 2022 may be difficult to top.”

Total central bank gold buying in 2022 came in at 1,136 tons. It was the highest level of net purchases on record dating back to 1950, including since the suspension of dollar convertibility into gold in 1971. It was the 13th straight year of net central bank gold purchases.

According to the 2023 Central Bank Gold Reserve Survey recently released by the World Gold Council, 24% of central banks plan to add more gold to their reserves in the next 12 months. Seventy-one percent of central banks surveyed believe the overall level of global reserves will increase in the next 12 months. That was a 10-point increase over last year.