There is pressure in the USD to rise because the FED is not cutting rates. It looks like the EUR is falling out of bed. Since the USD is the much larger reserve currency there is the beginning of pressure on gold to POSSIBLY to fall from here.
It is very early to make that call and can be wrong. It is too early to securely call any trend in gold. The trend over the last several months has been bullish.
As inflation bets unwind gold is at risk. This period is going to be very stable in the US and EU from here on out. The political flash points will do little to change the underlying economic realities in the US.
OK, Iâm trying to figure out why this is so important. Does anyone really believe the world is going to start using the Renmibi as the world currency? With a government that is one of the least transparent in the world?
Gold is great to have in a moment of world turmoil, so perhaps China is planning on something with Taiwan in a few years and wants to be ready when the rest of the world cuts off its exports and it has to bribe its way into continuing imports of chemicals and fuels?
Tip: Virtually all of the âaudit the goldâ fever is a bunch of cranks, distrustful of everything government does with no other way to attract similar cranks to their cause. Gold is an easy one, but a momentâs reflection would quickly show that it would require a conspiracy of such vast proportions, involving hundreds, perhaps thousands of people, all of whom somehow keep the secret that the gold bars in the vaults are really just painted iron (or whatever the nom-du-conspiracy is this time).
The gold has been audited multiple times over the years. Heck, it is audited by groups from the US Mint, the Federal Reserve, and the Financial Operations Bureau. And this is true even when the crankiest of the crackpots have been in power.
Could the US dollar lose reserve currency status? Sure. And it will someday. But given the strength of the US economy, which is the largest determinant of âwhat other countries accept in paymentâ, it probably isnât going to be soon. The next largest economy is China, which for political (and other) reasons is nowhere near that plateau.
(Yes, many are jealous of the dollarâs status and make noise about supplanting it. Most likely they might manage to pinch off a tiny bit of halo, but wholesale replacement? Unlikely absent world changing economic conditions brought about by war, pestilence, or other macro conditions.)
I didnât post my âbeliefâ. I posted an article that i found interesting and expressed some scepticism about it. I thought that was what TMF was about.
So, where do you do to get the âtruthâ? Please post a link(s).
Have you ever worked in academia? I have, and calling people liars just because they bring up something different to your views would not be accepted. I read through TMFâs terms and conditions and I donât think jumping in with accusation like that meets their terms and conditions.
Well, for one, it just sits there. It doesnât produce anything. Even a lowly bond produces some level of interest (except for a brief insane period recently where people were peddling negative interest rate bonds). I will reiterate from above, you really, REALLY, should read this piece (beginning in the middle of page 18). Itâll take max a few minutes, but itâs well worth it.
In a world where U.S. hegemony can no longer be assured, it makes sense for central banks to diversify away from the dollar, which has historically made up the bulk of their reserves. Gold is a natural beneficiary of that move.
I do not buy that. Russia and China are fading. Spazmatic sure. The US, UK, EU, and Japan are rising. Early days sure. But 3% inflation is not the kiss of death for the US economy.
As far as Trump/Nato? The words were unnecessary. Central Europe is about to become a major military industrial complex. All we are watching is good cop bad cop. It is all the same.
Central banks tend to buy gold when they forecast either future inflation or economic instability. If I were Poland with a war going on next door that might spread, I too would probably be inclined to buy gold. Same with China, currently facing a devaluating Yuan, a decelerating economy, and increasing tension with the West.
Not sure what the rationale would be for an individual American investor, unless one thinks the stock market is about to crash and society go to Hel(sinki). Here is a 10-year investment quilt from BOA.
The S&P (dark blue box) generally outperforms gold (orange box), and often by a huge margin. For safety, gold performance is not much different than treasuries, with the latter generally much less volatile.
Personally I think buying gold is overthinking things, a classic case of âI understand stuff the masses do notâ, which is probably not true. I bet money parked in an index fund will outperform 99% of those doing active gold trading, with the added benefit of allowing time to binge-watch Netflix.
I bought some gold coins last yearâŚ
After Mardi gras, n St Patrickâs day.
Got em on sale at Party City for 50% off.
I put em on the surface of a pot plant, and scattered a few around my patio.
It was GREAT FUN walking through the patio, seeing the âglintâ of gold.
The wind pushes em around so I never know exactly where they will be.
It is an adventure!
The sun bleached em to silver, after a couple months.
Now, they look like coins that have aged in a sunken or buried treasure chest!
Since the USA defaulted on the Bretton Woods agreement gold has rise from $35 an ounce to over $2,000. Excel tells me that this is growth at around 8% pa with no counterparty risk. Iâm happy to park some of my wealth in gold and silver.
Proving conclusively that where you start your measurement is crucially important when discussion finances.
Here is a chart of gold prices, corrected only for inflation, for the past 100 years. If you jumped into that âBretton Woodsâ period you did really well. If youâve come much later than that, well, youâre barely keeping up with inflation, and depending on the years in/out, youâre behind, sometimes way behind.
