The value of money is dropping fast against gold and precious metals

November 5, 2025
0 comments
Montrose Star
Posted in A PEACENIK RANTS
1

Is financial disaster on the way?

By Rick Ehrlich

The U.S. Treasury Department tells us our official inflation rate is 2.8% as of August 2025. Ha! Do you buy groceries much?

The price of gold ended 2024 at $2,800 per ounce, but last week (October 2025) it was $4,250. This is 52% price inflation in a full year, or approximately half again the prior year end price. And it should scare any rational person who has to pay bills in the future. Sources (below) tell us the dollar has dropped slightly against the world average of all currencies in 2025, but it doesn’t take a mathematician to see that ALL currencies dropped hugely in 2025 vs the price of gold. This turns out to also be true versus silver, and other precious metals and stones.

For several decades, almost all large countries of the world have been on a borrowing binge. At present, currency values and debt levels prevent most countries from launching new large projects for their people. Our own debt–to–GDP ratio has soared from 31% in 1980 to 122% today. Sickening. Our government officials, both Democrat and Republican, refuse to reduce spending and thus reduce the annual deficit, with no change in attitude seen (annual deficit equals the annual increase in our national debt). Our legislators are all 100% millionaires with government pensions of minimum $173,000 per year. Why should they feel any personal risk?

Gold backed currency to “Fiat” Currency

The 1970s were the closest analog to this expectation, from the shock of our government going off the “gold standard.” Prior to 1971, every dollar circulating was backed by $1 worth of U.S. Government owned gold. Suddenly in 1971 the USA switched from gold-backed dollars to so called “FIAT” currency….as in God said, “Lux Fiat,” …let there be light…and there was light. (FIAT, pronounced Fee-at, like the Italian car, Fiat).

In 1971, our government said no more gold, LET THERE BE DOLLARS (fiat dollars) based on nothing (faith and credit), just because we say so.

In one year from $2,800 to $4,250 per ounce, this is 52% price inflation / AdobeStock.com

The price of gold then zoomed upward, by 1980 reaching 25 times the 1970 price. In the slightly delayed market shock, interest rates rose steadily to where the USA paid an average 9% interest rate on our 1980 debt, before the world adjusted to trust in fiat currencies. Note that in the present environment (shock of dramatic gold price rise), our interest rates have not yet risen dramatically, just as the initial years after 1971; this big rate increase took several years (9 years). But the gigantic and growing national debt amounts to be continually refinanced/borrowed anew, together with relative lack of trust in Fiat currencies, will find no way to avoid rising rates. If we have to pay 9% soon, interest expense will triple from presently $1 trillion to over $3 trillion per year. Plain description: Prices go up really fast, the value of money drops through the floor quite fast, and the living standard drops fast. Pensions become worthless, life savings are effectively wiped out, and it takes some time for any equilibrium to return which would result in a stabilized new, lowered economy. If this happens, which seems very likely, it won’t be pretty.

Sources: Mercatus Center, Investopedia, U.S. Federal Reserve Bank, Treasury.gov, Statista.com, The Holy Bible