The only shipwreck survivor washed up on a small, deserted island. Every day he scanned the horizon, hoping to see any signs of life in the distance. There was nothing but water from miles away. After a few days of unfathomable living conditions, he mustered enough strength and resourcefulness to build a tiny makeshift hut out of driftwood to protect himself from the elements and store his few remaining possessions.
After a few weeks, he couldn’t take it anymore. He feverishly prayed for God to rescue him. One day, after scavenging for food, he approached camp to find his little hut in flames. Giant balls of smoke rolled up to the sky. He could barely come close because of all the debris. He felt the worst had happened, and everything was lost. He was stunned with disbelief, grief, and anger. He cried out, “God! How could you do this to me?”
Early the next day, he was awakened by the sound of a ship approaching the Island. It had come to rescue him! “How did you know I was here?” asked the weary man to his rescuers. “We saw your smoke signal,” they replied. As they dug through the rubble to recover anything of value before departing the Island, they discovered a heap of buried Gold unearthed during their excavation. He then realized how God was orchestrating everything for his benefit.
Everyone loves a good fairy tale that ends in Godly salvation and striking it rich. Perhaps the initial leaders of the United States attempted to meld these two pursuits by placing the words “In God We Trust” on U.S. coins beginning in 1864. Later, on July 11, 1955, Congress passed a law that mandated “In God We Trust” to be included on all U.S. currency. (PS, let’s see how long that lasts!)
While we are on the topic of the history of American currency, it’s important to recall that the U.S. had been on a “gold standard” since 1879. The U.S. implemented a partial gold backing in 1933 and finally abandoned any gold backing in 1973, by the executive order of President Nixon. Nixon was attempting to address rampant inflation and a run on Gold. The gold standard was replaced by “fiat money,” ordering that U.S. dollar currency be accepted as a means of payment without question.
Perhaps that was the beginning of the end for the American monetary system. Today, five decades later, we are facing the repercussions of these policies. To put it into greater context, the U.S. has printed nearly 80% of all U.S. dollars ever since January 2020. Inflation is now rampant, and the Federal Reserve is attempting to battle this monster with another rate hike of 75 bases points this past Wednesday at the FOMC. And it’s done yet as Fed Chair Jerome Powell promises even more increases.
During periods of rampant inflation, recession fears, poor market sentiment, and geopolitical turmoil, Gold was often the go-to asset and investor favorite. So far in 2022, Gold has outperformed equities and bonds as many look to it as a safe haven during volatile times. However, there is much controversy and uncertainty as Gold is not performing as many believe it should be. Some blame market manipulation; others point to a highly-unhealthy strong U.S. dollar, which is at record highs.
This week Gold made headlines once again as it spiked after comments from Russian President Vladimir Putin. Putin threatened to use any means necessary, saying, “Russia will use all the instruments at its disposal to counter a threat against its territorial integrity — this is not a bluff.” The speech ended up pushing the U.S. dollar to a new 20-year high. The fact that the dollar is rallying here is extremely dangerous, in my opinion.
The world’s economic, fiscal and geopolitical outlook seems to be hanging in limbo as we approach our Jewish New Year. It is no surprise to me. God wants to remind us that we have only one place to turn our interest and investment … “In God We Trust.” Wishing you and your family a happy, healthy, safe, and prosperous year to come.
Shout out and happy birthday to Michael Amendola, Sammy Baron, Jason Beckoff, Jacob Busani, Sara Ehrenreich, Avi Elishis, Dave Friedlander, Shneur Gershuni, Ari Ginsberg, Lynn Gold, Boruch Klahr, Reuven Ibragimov, Bracha Ickovitz, Isaac Miller, David Secemski, and Seth Winslow
Shmuel Shayowitz (NMLS#19871) is a highly regarded Real Estate & Finance Executive, Writer, Speaker, Coach, and Advisor. He is President and Chief Lending Officer of Approved Funding, a privately held national mortgage banker and direct lender. Shmuel has over twenty years of industry experience, holding numerous licenses and accreditations, including certified mortgage underwriter, licensed real estate agent, residential review appraiser, and accredited investor, to name a few. Shmuel has successfully navigated through many changing markets and business landscapes, making his market insights and experience well coveted within the real estate industry. He can be reached via email at [email protected]