Don’t Sell Your Gold Now!
The Nixon Shock
The plan to upend the global economic order wasn’t hatched on Aug. 15, 1971, but in the days leading up to it. President Nixon gathered his top economic team in a secretive weekend summit at Camp David starting on the afternoon of Aug. 13.
Over those intense days — 54 years ago — power brokers including Treasury Secretary John Connally, Federal Reserve chair Arthur Burns and then-Treasury Undersecretary Paul Volcker debated the future of the gold standard and the dollar.
Photo courtesy: federalreservehistory.org
President Richard Nixon at Camp David with Fed Chair Arthur Burns (far left) and Treasury Secretary John Connally (second from left) in August 1971
Burns cautioned against closing the gold window, but the majority, swayed especially by Connally, pushed for action. Nixon decided to suspend the dollar’s convertibility to gold temporarily and impose a 10% surcharge on imports — moves supposed to protect the U.S. economy and wrest control from currency speculators.
Living up to its “Nixon Shock” moniker, not even key officials from the State Department were privy to the secret severing of the dollar’s tie to gold. Meanwhile, Nixon timed his big speech to catch the Sunday night TV audience, ensuring maximum shock would ripple through a world wholly unprepared for the dawning of a new money era.
Over the 54 years since? Inflation has averaged around 3.9% annually, resulting in prices rising more than sixfold. What cost $2,500 in 1971, for example, would cost over $19,000 in 2025 — reflecting substantial long-term inflation pressure not seen before that period.
Three Reasons to Stay the Course
Understanding this pivotal moment in history helps explain why gold remains a vital asset today — especially as Paradigm editor Sean Ring highlights three compelling reasons to hold onto gold.
First, the market trend for gold remains powerfully bullish. Sean points out gold is in a “full-throttle, textbook” uptrend with clear technical signals like a golden cross — when the 50-day moving average is well above the 200-day. He explains that price pullbacks have been brief and met with aggressive buying, proving the trend isn’t over.
Selling now, Sean warns, is like getting off a climbing train halfway because you think the view can’t get any better. But history shows gold’s biggest gains often come after investors feel the gold market has peaked.
Second, Sean emphasizes the heavy tax consequences of selling. In the U.S., physical gold is taxed as a collectible at rates up to 28%, far above standard stock capital gains taxes. Add to that lower sale prices due to dealer markups and selling gold cuts deeply into your profits. Sean calls it “financial lunacy” to sell now, face a steep tax bill and miss out on future gains.
Last, Sean reminds that gold’s primary role is as a financial insurance policy amid rising systemic risks. It is immune to earnings seasons or fiscal policy and has preserved value through centuries of crises.
With central banks buying gold aggressively, historic debt levels, growing geopolitical tensions and challenges to the dollar’s reserve status, these structural forces driving gold higher remain very much in play. Selling now means sacrificing protection in an increasingly unstable world.
Sean’s key takeaway: “If you’re holding gold right now, you’re in a sweet spot: The chart looks great, the fundamentals are supportive and the alternative assets are far less appealing.”
All told, gold’s potential for dramatic gains remains very much alive. As Paradigm’s macro authority Jim Rickards reminds: “From 1971 to 1980, the price of gold soared over 2,100%. A replay today would put the price of gold at $75,000 per ounce.”
[High-Priority: It’s not every day a Paradigm VP hops on a plane to middle-of-nowhere western Utah.
But when this much money is at stake — $150 trillion — it’s worth investigating on-site. And that’s exactly what VP of Research Aaron Gentzler just did.
What he found in Utah confirms a Phase II boom of Jim Rickards’ “American Birthright” thesis that President Trump is unleashing now.
Historically, Phase II has been the most lucrative investing window across resource booms. Gains that could be 10X... 20X... even 100X bigger than what we’ve seen from mining stocks so far this year.
Within a span of just three years, in fact, investors could’ve seen rare peak returns of 7,500%... 20,183%... and you won’t believe this… 140,000%.
That is not a typo. It’s a genuine financial opportunity that was created by this rare Phase II pattern. And the story Aaron’s investigating in Utah could be even bigger than Jim Rickards’ original prediction.
Check it out for yourself right here.]
Russell 2000: “Negative Selection Bias”
The Russell 2000, the bellwether index for small-cap stocks, just made headlines by leaping 4.8% this week. That’s unusual for what Paradigm’s trading pro Enrique Abeyta calls “some of the worst stocks on Wall Street.”
About 40% of Russell 2000 companies, in fact, lose money, compared with just 6% of S&P 500 companies. And over the last decade, small caps have persistently lagged the broader market — no sugarcoating it: “Small caps suck,” Enrique quips.
However, this week’s sudden surge prompts an important question: Could we be witnessing the beginning of a significant upside shift?
First, the Russell 2000 represents the smallest two-thirds of the Russell 3000, which covers the biggest U.S.-listed stocks. Despite comprising 2,000 companies, the total market cap of the entire Russell 2000 — less than $3 trillion — is less than the market cap of some individual companies, including Nvidia, Microsoft and Apple.
There’s also a catch: According to Enrique, the Russell 2000 is set up with “negative selection bias.” For instance, once a company becomes too successful, it grows out of the index into the larger-cap Russell 1000.
Translation?
The Russell 2000 is built to lose its winners and keep the weaker hands. As Enrique puts it, these stocks are “the small ships in the economic ocean” — easily swayed by storms like recessions, interest-rate shocks or swings in commodity prices.
This structural weakness explains why the index has badly underperformed. In the past 15 years, the S&P 500 has soared 500%, while the Russell 2000’s gain is just 265%. That’s before considering nearly half the index is unprofitable. Yet despite all this, small caps punched higher this week.
So what’s giving small caps a lift now? Enrique says hopes for interest rate cuts. Small companies are especially sensitive to rates — their weaker balance sheets and tighter access to capital make them big beneficiaries of cheaper borrowing costs.
“Lower rates could help them tremendously,” he adds. “Investors are getting excited about the possibility that the underperformance in small caps may finally reverse.
“If the Fed cuts rates into a stable, growing economy, then the market’s weakest stocks could become the fastest movers.
“And when that shift happens,” he concludes, “you’ll want to be ready for it.”
Taking a look at stocks today, the Nasdaq (-0.50%) and S&P 500 (-0.30%) are taking a breather at 21,590 and 6,445 respectively. In sympathy, the Russell 2000 is down about 0.70%. But the Big Board’s up 0.20% to 45,000.
Turning to commodities, oil is down 1.20% to $63.20 for a barrel of WTI. Precious metals? The price of gold’s up 0.15% to $3,388 per ounce. Silver, moving in the opposite direction, is down 0.15% to $38.
As for the crypto market, Bitcoin’s lost 1%, just hanging onto $117K, while Ethereum is down 3.60% to $4,395.
And we have a couple economic numbers to report:
U.S. retail sales increased 0.5% in July, slightly underperforming economists’ expectations, but marking the second-straight monthly gain after a spring slowdown. The rise was driven largely by purchases of automobiles and home furnishings, reflecting some pre-tariff spending on big-ticket items.
According to the Federal Reserve, U.S. industrial production edged down 0.1% last month, slipping after a revised 0.4% gain in June.
Big Tech’s Power Grab
Big Tech’s AI data centers consume staggering amounts of electricity, fueling a rapid buildout of power plants and transmission lines.
If you’re a regular 5 Bullets reader, you know we’ve been tracking this story since Paradigm’s science‑and‑tech expert Ray Blanco first flagged the AI-energy connection in January 2024. Managing editor Dave Gonigam has also warned for three summers about the fragility of America’s power grid.
Here’s the latest twist: Much of today’s tension comes from outdated cost‑sharing models that spread transmission expenses across the board, without factoring in the enormous electricity demands of just a handful of corporate customers.
Research shows that even when utilities set special rates for data centers, those fees still don’t fully cover the cost of building new power plants — effectively forcing everyday households and small businesses to subsidize Big Tech’s energy appetite.
That means regular Americans and local companies are footing a disproportionate share of the bill.
Some states are starting to push back. Pennsylvania Gov. Josh Shapiro and other leaders have challenged steep price hikes from PJM Interconnection — the regional grid operator for much of the mid‑Atlantic — warning about unjustified costs hitting consumers.
In fact, a 2024 report found that data center demand accounted for 70% of the region’s electricity price increases last year, totaling $9.3 billion.
About a dozen states are now moving to shield ratepayers from carrying the full load. Oregon, one of the nation’s top data center hubs, passed a law in June 2025 directing regulators to set new, presumably higher, electricity rates just for these massive facilities.
This, as Oregon residents have endured electric bills surging up to 50% in four years — while utility disconnections hit record highs.
Other proposals under consideration include requiring data centers to source their own power, a step that could ease the strain on the grid and place the cost burden squarely on the tech giants themselves.
Still, given how aggressively states compete to lure data centers, it’s unclear whether policymakers will have the resolve to make Big Tech pay for the expensive transmission upgrades it drives — without sticking average Americans with the tab.
Working Hard at Hardly Working
In the heart of China, Shui Zhou clocks in at a faux office every morning — he’s not really employed, but his days are packed. From 9 a.m. until late into the evening, Zhou sips tea, laughs with “colleagues” and occasionally sends staged photos home so his parents feel at ease.
Zhou now pays about 30 yuan ($4.20) daily to the Pretend To Work Company in order to keep up appearances of gainful employment.
This isn’t some elaborate hoax, but a reality for thousands of young professionals priced out of China’s shrinking job market. Indeed, it’s a curious fix for a serious problem…
With youth unemployment stubbornly above 14% in 2025, China’s job-seeking Gen Z are shelling out for a desk, WiFi, snacks and the illusion of success.
Courtesy: LinkedIn
I suppose no one’s getting business cards printed…
For others, like recent graduate Xiaowen Tang, the facade goes a step further: staged “work” photos sent to universities count as proof of internships required for graduation.
Meanwhile, the owner of the faux office, having once faced business failure himself, calls it “the dignity of not being a useless person.”
Some might call it a social experiment; others see symptoms of a broader economic malaise. Whatever the case, pretend-to-work companies are booming in cities like Shanghai and Shenzhen, echoing the quiet frustration of a generation caught in limbo.
Sure, these offices might run on delusion, but they’re serving up something real: a sense of community that keeps everyone coming back.
Here’s the million-yuan question: Does “pretending to work” count as work experience?
Take care, reader! Don’t work too hard this weekend…
Best regards,
Emily Clancy
Associate editor, Paradigm Pressroom's 5 Bullets
