Golden Bull Market - When the Cracks of Modern Currency Faith Meet the Timeless Trust of Five Thousand Years

In the past two years, the price of gold has surged significantly, recently breaking through $4,000 per ounce and quickly surpassing the historical record of $4,400, with an increase of over 50% this year. However, since the end of October, gold has entered a correction mode after the explosive rise.

Whether it is sovereign central banks, institutional investors, or ordinary individuals, there has been a trend of buying gold over the past two years, with some investment moguls showing a particular fondness for it.

"Currency is naturally gold and silver," Marx's famous saying resonates. Gold is often regarded as true currency or a genuine store of wealth. However, as the gold standard faded into the annals of history a century ago, and today gold's price is marked by various national fiat currencies, the value of this ancient asset has long been "determined by fate, not by me"! So, who are the real driving forces behind the wild fluctuations in gold prices, and where is the critical point between value and bubble?

In reality, it is not that the value of gold assets has increased significantly, but rather that the value of modern currency, represented by the dollar, has been drastically shrinking. The unprecedented levels of global debt issuance, central banks printing money in massive quantities to purchase debt, and the asset scarcity caused by excess liquidity, along with the U.S. crossing the bottom line of modern financial civilization with its long-arm sanctions on overseas dollar assets, and the unstoppable AI stock market bubble, have led more and more people to sense the looming post-modern financial crisis. In other words, the money-printing machines of fiat currencies and the dazzling narratives of AI giants appear more like a form of "financial fraud" from the perspective of classical finance. The feeling of being deceived marks the beginning of a faith fracture, and at this moment, gold seizes the opportunity to become a comfort of financial classicism and conservatism, or a strategic "currency anti-fraud" hedging tool.

Gold That Does Not Generate Interest

Is It a "Ponzi Scheme"?

Of course, during the strong upward trend of the super bull market in gold, voices questioning the value of gold have been incessant, with some even calling it the largest bubble and the biggest scam in human history.

First, the biggest problem is that gold does not generate interest, nor does it provide dividends; it is a non-yielding asset.

Second, because it cannot generate a continuous net cash flow, it cannot be priced using classic asset pricing models. Classical finance textbooks assert that the price of an asset is the present value of its future net cash flows, which gold does not possess.

Third, since gold itself cannot generate interest or rent, its pricing can only come from capital gains, that is, the price difference brought about by price increases. This model resembles a typical "Ponzi scheme," where the current price is entirely supported by the expectation of higher future prices, which is a classic bubble, isn't it?

At the same time, gold is also a classic "safe-haven asset," hence the saying "buy gold in chaotic times." Additionally, gold is a classic "anti-inflation asset," becoming the most reliable "ballast" for wealth preservation in times of soaring prices. Most remarkably, gold is the oldest representative of wealth, enduring for at least five thousand years; it is also the most widely recognized form of super-sovereign, super-civilizational wealth that transcends race, nation, region, and culture.

If we harshly define gold as a bubble in human civilization, then what kind of bubble is a "timeless bubble" recognized by billions of people over five thousand years? How can such a solid bubble be defined as a bubble?

Compared to Gold, the Modern Currency System in Disarray Resembles a "Scam"

In contrast, compared to gold as a physical asset, the undisciplined and rule-less fiat currency may be the biggest bubble or "scam."

The global reserves of gold can at least be calculated, possessing objective hard constraints. However, for current fiat currencies, as long as central banks lightly "tap the keyboard," new bills worth hundreds of millions, billions, or even trillions can be created out of thin air (the core idea of MMT). Although there are various legal and institutional constraints in form, whenever a major crisis occurs, there are always excuses to break through these legal and institutional constraints, a phenomenon known as "dynamic inconsistency" in game theory.

To date, the U.S. government has breached the debt ceiling over 100 times, with the total debt accelerating past $37 trillion, rendering the debt limit a mere facade with no binding power over currency and debt, and the market is indifferent to this facade. For fiat currency, the independence of central banks or their avoidance of becoming the printing machines of politicians is the last line of defense for monetary credit. The Trump administration's blatant interference and criticism of the Federal Reserve have heightened investors' concerns.

The Trump administration has been recklessly testing this bottom line, and other countries are not faring much better, all imitating this behavior. The dollar, as the world currency and hegemonic currency, was originally the "anchor of constraint" for other countries' currencies. But today, the dollar is filled with uncertainty, and other countries, in order to maintain exchange rate stability and fully utilize the space of dollar easing to address domestic economic downturns, have also significantly increased debt and printed money. It can be said that in a global economic environment lacking growth momentum, where everyone is desperately seeking market demand and the "first party" in international trade, competing to devalue their own currencies has become a more clever form of trade war. This appears to investors as a kind of hidden scam.

Looking at Today's Super Bull Market from the Twenty-Year Bear Market of Gold

Of course, the faith in gold has not always been strong; there was a period of faith collapse known as the "lost twenty years."

In the early stages of modern financial development, after the collapse of the Bretton Woods system in the 1970s and before the internet bubble crisis in the early 2000s, there was a period of over thirty years marked by waves of globalization and democratization, accompanied by the internet technology revolution and Wall Street financial innovations. People were filled with confidence in the progress of human civilization and the modern financial system, believing in the strict discipline of the monetary fiscal system at that time, the strong independence of the Federal Reserve, and even surpluses in fiscal revenues and expenditures. This enduring confidence accumulated into faith. The formation of dollar faith marked the collapse of gold faith.

After the collapse of the Bretton Woods system, gold experienced a period of rapid "rebalancing" or "revaluation" (rising from $35 to $850) before entering the longest-lasting "bear market" in history, plummeting from $850 to $252 over nearly twenty years, a decline of 70%. It can be said that this twenty-year period was the shining moment for the U.S. and the dollar, yet it was the "darkest time" for gold.

Today, the political, economic, and financial environment of the world seems to be completely opposite to the time of the gold bear market. The gold bear market period was characterized by rapid globalization, the entry of Russia as the third-largest resource country and China as the most populous country into the global trade system, an era when the Federal Reserve was independently managed by technocrats like Volcker and Greenspan, adhering to monetary rules, and the end of the Cold War, when universal ideals like "the world is flat" and "global village" were thriving.

Today, we are in an era where anti-globalization rhetoric and thoughts are rampant, trade wars are in full swing, great power rivalries and geopolitical conflicts are constant, nationalism and racism are prevalent, and the extreme right is making a comeback. The U.S. is leading global central banks in a race to "tap the keyboard" and print money, in an era where the international monetary governance system is in disarray, and where the flood of currency and debt is erupting.

In such a time of great contention, we must rethink the issue of the most fundamental assets or ultimate anchors of human wealth. The essence of a bubble comes from faith; a bubble does not perish because faith does not perish. Once faith is shaken, the impact on the value system will be seismic, not to mention a collapse.

The Gold Bull Market Reflects the Crisis of Modern Currency Financial Systems Today

If people feel the "fraudulence" of modern currency and finance, how can they protect their fragile financial wealth? Especially for central banks managing trillions of dollars in national wealth, if they see the insecurity of dollar assets, what anti-fraud measures will they take to protect national financial security? This delicate question arises: in an era where the modern monetary financial system is so developed, and the financial tools and products created by financiers are so dazzling, why has an "antique asset" from the depths of history suddenly rejuvenated and become the object of frenzied purchases by governments (central banks), financial institutions, and individual investors in recent years?

The super bull market in gold is a phenomenon of "currency return" and "financial return." However, in a system where modern currency and financial tools cannot provide a sense of security, what other choices do investors have besides seeking the faith and comfort of value anchors from deep history?

The "fraudulence" of modern currency and finance is, of course, a playful and metaphorical expression. We cannot be anti-modern, but we must also view the crisis of modernity objectively. Modernity is inherently unstable (the core idea of Minskyism), and the history of the modern financial system is a history of periodically erupting modern financial crises. The unchecked global seigniorage of hegemonic currencies, the excessive extraction of financial capitalism, the greed and madness of the general public, the scholars' "this time is different" theory, and the dazzling narratives of social media all fill modern finance with "fraudulent" illusions. When more and more people worry about the fraudulence of modern currency and finance, especially when central banks managing trillions of dollars in national wealth begin to worry, it becomes understandable to increase allocations to gold, which has a timeless faith spanning thousands of years, transcending sovereignty, civilization, and history. The super bull market in gold, manifested in this investment behavior, can also be seen as a collective "financial anti-fraud" movement of global investors.

Of course, such a collective movement is also bound to become frenzied; even the most radical gold investors may be astonished by the continuous surge in gold prices in recent years. Does this mean that an anti-bubble action has led to a new and larger bubble? I do not think so, because as long as the world remains in a state of great contention, the sense of security, trust, and ultimate value anchoring faith that gold provides will not waver, and gold will still be the strategic "bottom warehouse" of asset allocation.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。