Hi Timber, think of it as the cost of insurance premiums.
You own a house on the edge of Fiat cliff which is eroding at an increasing rate.
As the cliff erodes further and further the price of the insurance to cover you when you entire house falls off the cliff increases.
The insurance is physical gold purchased using the currency of the day.
The very smart, much smarter than me, spotted this 10 years ago and bought insurance at $400 oz. Others are currently buying as much insurance as they can get their hands on.
Now this insurance may, in time, be proven to be unnecessary. The cliff may stop eroding and the house may be safe. This will take a great deal of hard work and unpopular decisions by elected officials. This is unlikely imo. It has also never happened in the past as every Fiat cliff has eventually collapsed into the sea.
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