Gold’s Endgame – And One Producer Ready to Surge
Here's the company that's unlocking real potential beyond the Basel III Endgame – and why its poised to break out.
"During the gold rush it’s a good time to be in the pick and shovel business”
- Mark Twain (attributed)
In March, we reported from the Austrian Mint for Prinsights. While holding a high-quality bullion bar in my hands, it struck me how its weight, physicality and sheen reinforced gold’s history as a proven and solid asset.
Now, its future is accelerating. That’s because more investors, central banks, financial institutions, and sovereigns are turning to this precious metal to secure economic, financial and national security.
Because of these trends, it’s important to understand some of the history of gold. That’s because it can give us a firmer expectation of what could come next.
From Sutter’s Mill to the Modern Reserve
In 1848, gold was discovered at Sutter’s Mill in California. Within a year, more than 80,000 people flooded the American West. By 1851, the Gold Rush was in full swing, drawing migrants, prospectors and capital from around the world.
These pioneers and speculators weren’t chasing a dream. They were chasing a metal they could touch and use. Gold represented certainty in a volatile frontier.
It was not dependent on promise or credit. It had wealth creation value outright.
About a century later, it would graduate to widespread general monetary value.
The 1971 Break: Gold Leaves the System
By 1944, the Bretton Woods system was established by 44 allied countries in the wake of World War II. Under that system, all major currencies were pegged to the U.S. dollar, and the dollar was converted into gold at a fixed rate of $35 per ounce.
This framework gave gold a central role in the global monetary settlement, which held for nearly three decades. It was gold’s value that ironically broke the framework apart, too.
Growing U.S. fiscal imbalances, trade deficits and a run on the dollar in favor of gold weighed on the Nixon Administration and key bankers, like David Rockefeller, who preferred borrowing fiat money to grow their business rather than gold as it was cheaper.
In 1971, the U.S. formally ended dollar convertibility into gold, closing the gold window and severing gold’s last official link to the currency.
Once the Bretton Woods agreement collapsed, gold was removed as an anchor from international settlements, stripped from central bank models, and gradually excluded from the regulatory frameworks that governed bank reserves.
For decades, that exclusion held. To be clear, gold remained valuable, and as we have discussed at length here at Prinsights, there are a myriad of factors contributing to its current momentum. However, it also remained external to bank balance sheet metrics.
What that meant, was that gold was accumulated and held in vaults, traded in futures, and used to back ETFs. But it was not integrated into the core mechanics of banking regulation – particularly in terms of how those applied to bank liquidity.
That’s changing rapidly – but not all in one day.