Today 40-year veteran, Robert Fitzwilson, wrote the following piece exclusively for King World News. Fitzwilson, who is founder of The Portola Group, has an absolutely fascinating and incredibly important 45-year chart, which is a spectacular illustration of why gold and silver are in bull markets. Fitzwilson also discusses how this wealth destruction cycle will be uniquely different from the 70s, and multiple ways investors can protect themselves.
Below is a chart of the Trade Weighted Dollar Index. The Index was created in 1973 by J.P. Morgan. The Index is heavily weighted by the Euro (almost 60%). Roughly 77% of the Index is currently comprised of European currencies with the Yen (about 14%), the Canadian Dollar (about 9%) making up the rest. The Index was only changed once, and that was due to the introduction of the Euro.
As you can see from the chart below, the period from 1977 to 1980 was a rough one for the world’s reserve currency. Some of us were concerned about a Kondratieff Wave collapse in the mid-to-late 70s. The precursors for a collapse seemed to be there, including a declining U.S. Dollar and Depression-like economy. Prices and interest rates were going through the roof. Sections of the U.S. were in depression territory. The Mid-West was called the “Rust Belt”. Seattle had a billboard that said “Will The Last Person Leaving Town Please Turn Out The Lights?”. It was humorous, but it also reflected the severity of the times.