1. Let’s assume that a reader has considerable savings to invest, thanks to the ingenious policies of the authorities that have governed our country for so long, and with the degree of competence that we’re all familiar with.
  2. Let’s also imagine that this reader, who is exceedingly risk averse and has only one goal in life - to become a ‘rentier’ in the Balzacian sense of that term - asks theirself what the best way might be to achieve absolute idleness, the objective of all persons of substance.
  3. Lastly, let’s imagine that our reader has a choice between investing their capital in gold, or French Treasury bonds, and that they have to make a choice for the upcoming 20 years, as that corresponds more or less to their remaining lifespan.

The first thing they are going to do is to check how these two assets have evolved in relation to one other previously. Given that the gold standard ended, to all intents and purposes, in August 1971, this is date from when they will start their comparison.

This is what they will discover.




The markets are truly prodigious!

The profitability between gold and French bonds, after 50 years of nationalizations, privatizations, strike action, epidemics, economic and political crises, budget deficits and I don’t what else, is exactly the same.

And this is true for pretty much all countries. I could have shown the same calculation for Switzerland and I would have had a similar outcome, of a convergence of the profitability of the two assets (around 1000 CHF).

In other words, markets are extraordinarily efficient at mediating risk long term, something we have all known for a long time.

However, that comment does not hold true for the short or medium term, as shown by the second chart, where I show the ratio between the value of each asset, again from 1971, with a base of 100.



As one can see, we started out at 100 in August 1971 and today we’re at 99.5, which is remarkable.

But the discerning reader will have noticed that between 1971 and 1981, gold in French currency did 10 times better than the bond market before falling by 95% over the next 20 years, compared to the same bond market...

Gold has more than doubled since 2000 in comparison to its competitor, a French bond...

This leaves my aspiring rentier totally perplexed because they only have another twenty years left, at most, and in twenty years they could either lose 95%, or multiply their capital by 10, or double or lose 20%, and so now they don’t know what to do and turn to the Institut des Libertés for advice.

Always gracious, this author will answer their question with a very simple rule, which is:

  1. If the American central bank, the Fed, follows a policy aimed at euthanizing rentiers through short-term rates that are too low in real terms, the reader should invest in gold because if they remain in bonds, the Fed’s goal is to ruin them.
  2. However, if the Fed rewards the savings of American rentiers properly, the French government will then also be obliged to reward the French saver, which means they should buy U.S. bonds. They should therefore sell gold and buy French or American bonds, and the difference between the two will be very little.



That’s what the chart above shows.

Once again one can but be in awe of the intelligence of the markets.

  1. If the Fed decides not to reward savings, this will imply that money has lots its role as a way of “storing value”. Immediately that the central bank indulges in this little game, gold will go back to being what it never stopped being, which is a store of value that the central banks cannot destroy, because gold is an asset that is indebted to no one.
  2. If the Fed rewards savings properly, the local money, the US dollar, will keep its role as the store of value and there will be no reason to have gold.



Long before the Covid crisis, the American and European monetary authorities followed openly-Keynesian monetary policies to finance an explosion of state debt without historical parallel, and the crisis has highlighted this reality.

Therefore, it seems to me totally out of the question that we go back to a traditional monetary policy, as any increase in short rates in the U.S. and Europe would immediately trigger an unprecedented financial crisis in both the U.S. and the Euro zone.

It is therefore quite clear that my rentier must abandon all hope of receiving a reasonable return on their French treasury bonds which, in any event today provide no yield. As I have written endlessly about for some time, in a 50-year career this is the first time that someone proposes an asset for me to invest in and I am certain that I will lose because the rates on the France Ten Years are negative.

Our reader will therefore take the risk of gold because their government and the ECB have clearly stated that the goal of the monetary policy is to ruin rentiers and therefore, ruin them.

Gold will always be worth something, whereas no one knows what a French treasury bond will be worth in 10- or 20-years’ time. Perhaps as much as a bond from Argentina, Greece or Venezuela?

The slogan is therefore simple: French rentiers unite, sell your bonds and buy gold.

Vote not with your feet but with your capital, because those who govern you refuse to pay attention to your wishes.

It’s the only option left available to us to block the path to servitude, which is increasingly looking like a main street, or even a highway, to servitude.

To live free, or die remains the currency of all true citizens.