<p>With gold and silver pulling back from their all-time highs over the last few days, the naysayers on Wall Street – who totally missed the <i>huge</i> rally in both metals since Labor Day – have boldly declared the top is in.</p>
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<p>They further claim the dollar "debasement trade" has ended… and the U.S. dollar is set to strengthen.</p>
<p>We believe this is wishful thinking by the "paper bugs" who always seem to find a new excuse to bash gold and silver – and ridicule those who buy it.</p>
<p>As we're now 25 years into a secular bull run that has seen precious metals outperform U.S. stock indexes, you'd think these Wall Street sharpies would have finally changed their tune.</p>
<p>But the mainstream financial industry in America has a dollar-centric frame of reference – and they generally compare the dollar to other fiat currencies. Versus those other currencies, sometimes the Federal Reserve note dollar strengthens, sometimes it weakens.</p>
<p>It's better to view gold versus <i>fiat currencies as a whole</i>. They are ALL being debased – just at varying rates.</p>
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<p>Twenty years ago, the Dollar Index (DXY) was trading at 80; today it's trading at 99.</p>
<p><span>When using this "dollar" frame of reference, the dollar appears "stronger" than most of its fiat currency peers. But that's ridiculous.</span></p>
<div>In reality, the purchasing power of the dollar has<em><span> </span>dramatically declined</em><span> </span>over that same 20-year period. In 2005, gold was trading around $500, and DXY was roughly 80. Today, gold is $4,000+ while the DXY is 99.</div>
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<div><em>That means gold is up over 8-fold measured in those supposedly "stronger" dollars.</em></div>
<p><span style="text-decoration: underline;">Put another way, the dollar has declined 88% versus gold over the last 20 years. Talk about dollar debasement</span><span>!</span></p>
<p>Folks are buying gold – including central bankers – in order to reduce exposure to fiat currencies.</p>
<p>But most investors in the Western world are still massively <i>underexposed</i> to real money, and dangerously <i>overexposed</i> to paper money. This will change.</p>
