As the United States gears up for another pivotal election, the economic landscape remains a focal point of discussion. In this week’s Money Metals Midweek Memo, host Mike Maharrey delves into the broader economic implications of the upcoming election, offering a perspective that diverges from the typical narrative of each election being “the most important.” Maharrey argues that regardless of the election outcome, Americans are likely to witness a continuation of existing trends: an expanding federal government, increasing national debt, and the ongoing impacts of monetary policy.
The Growing Federal Government: A Persistent Trend
Maharrey reflects on the historical trajectory of federal governance, noting that every administration, irrespective of political affiliation, has contributed to the growth of the federal government. He emphasizes that both Republican and Democratic leaders have enacted policies that expand governmental reach. Historical data reveals a consistent pattern of increased spending from the Reagan years through to the Biden administration, with few exceptions.
Even former President Donald Trump, who campaigned on a platform of deregulation and smaller government, made significant moves that expanded federal control, particularly in areas such as gun regulation. Maharrey cautions that placing hope in any president to resolve the nation’s pressing issues—such as the burgeoning debt and the size of government—is likely misguided.
America’s Founders Warned of This
Drawing on the wisdom of the Founding Fathers, Maharrey cites figures like George Mason and Thomas Jefferson, who foresaw the dangers of centralized power. He argues that the United States has strayed from its constitutional foundation, where state governments were intended to wield significant authority. The erosion of decentralized governance has led to overreach, excessive taxation, and infringements on personal liberties. Jefferson’s warnings about the dangers of centralizing control in Washington, D.C., resonate strongly today, as Maharrey describes the current federal government as one of the largest in history.
Sound Money: Gold and Silver Lead the Market
In the face of these challenges, Maharrey posits that the real winners of 2024 may be gold and silver. Recent statistics underscore their strong performance: silver has surged by 42.4% in 2024, while gold has risen by 33.7% by the end of October. Both metals have outperformed major stock indices, including the NASDAQ, which posted a 24% gain, and have even outpaced broader commodity markets.
Gold’s price rally is particularly noteworthy, having set 39 all-time highs in 2024 alone. This performance reflects a growing investor confidence in gold and silver as safe-haven assets amid rising geopolitical tensions and economic uncertainty.
High Demand for Gold Continues
Maharrey highlights a significant surge in investment demand for gold, particularly in the third quarter of 2024, driven by geopolitical concerns and economic conditions. Total gold demand reached 1,313 tons in Q3, with the total value exceeding $100 billion for the first time. Exchange-Traded Fund (ETF) demand also saw a notable increase, with a 95-ton rise in global gold-backed funds, indicating that Western investors are finally joining the gold rally.
Despite elevated gold prices, central bank buying remains robust. For instance, Poland added 42 tons to its reserves, making it the top central bank buyer for the quarter. This ongoing accumulation by central banks signals a strong confidence in gold’s role as a long-term asset, even in a high-price environment.
Silver’s Strong Position and Growing Industrial Demand
While gold often captures the spotlight, silver is also performing remarkably well, particularly in industrial applications. Although it remains well below its all-time high near $50, silver has historically lagged in early bull markets only to make sharp gains later. With the gold-to-silver ratio currently above 80:1, silver appears undervalued, suggesting significant growth potential as the market matures.
Moreover, silver is experiencing increased demand due to green energy initiatives, with industrial demand expected to maintain a supply deficit. The cup-and-handle technical pattern on silver’s 50-year chart also suggests a bullish trend, indicating the potential for substantial price movement in the coming years.
The Case for Decentralized Power and Local Action
Maharrey, a longstanding advocate for decentralized governance, emphasizes the importance of focusing on state and local governments to counter federal overreach. As the national communications director for the Tenth Amendment Center, he promotes the idea of utilizing state and local powers to resist federal policies. Citing the anti-commandeering doctrine and Madison’s Federalist No. 46, he explains how states can refuse to cooperate with federal policies they oppose, thereby reclaiming some measure of autonomy.
Final Thoughts: Sound Money is the Real “Decision 2024”
Ultimately, Maharrey believes that the most prudent decision this election season is to invest in sound money. With rising national debt, aggressive federal spending, and ongoing monetary expansion, gold and silver offer a stable hedge against future economic challenges. He encourages individuals to explore precious metals as a means of safeguarding their wealth, noting that Money Metals provides a range of resources to assist in incorporating metals into investment portfolios.
For those seeking to take control of their financial futures, Maharrey directs listeners to Money Metals, emphasizing the importance of sound money in navigating the uncertain economic landscape ahead. As the election approaches, the focus on financial stability through precious metals may prove to be the most significant decision for many Americans.
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