The US government has a lot of debt. The US continues to add to that debt with record deficits. The costs of servicing that debt grow with every year of refinancing at higher rates.
And the Federal Reserve has already started on its “solution”— to slash interest rates, and print money, to bail the government out.
These conditions, along with the US government’s dysfunction, are why we believe the dollar’s days as the global reserve currency are numbered.
We often discuss how foreign central banks and governments are paring down their reserves of US dollars.
But that’s just one aspect of a reserve currency. The other is the dollar’s use by businesses for international trade.
In today's letter, we will drill down on this aspect of the reserve currency, and how business decisions, rather than political decisions, are also weakening the dollar’s status.
All of this is extremely inflationary. That’s why we keep coming back to real assets— critical materials, energy, and productive technology that cannot be conjured by governments and central banks.
Gold especially will benefit as central banks continue to shift their reserves into it.
But today, we’ll discuss a different type of gold investment that we haven’t gotten into yet— the streaming and royalty model.
You can read the letter here.
Warren Buffett Seventeen years ago, Warren Buffett surprised his shareholders and dutiful followers when he announced that his company, Berkshire Hathaway, “held only one direct currency position” during the year. Berkshire sits on a mountain of cash; that’s Buffett’s entire business model: buy cash-producing businesses, then reinvest those cash profits to buy more “wonderful” cash-producing…
