The King of Commodities
"In the beginning, God created the heavens and the Earth", then he created Gold!
The world is going through some tough times. We're dealing with a global economic slowdown, higher interest rates, and people spending less money. These issues are making the prices of things like metals and crops stay low.
Considering these challenges, it might seem like low prices make sense. But there's a chance that some unexpected things could happen in the coming months, and they could make prices of these things go up.
I took a quick look at this area, and except for cocoa (my favourite commodity), most prices are not very strong. This is especially true if we think about inflation (which is when prices generally go up) and a weaker dollar (which makes things more expensive).
I believe the dollar needs to get stronger compared to other Western currencies. This suggests that, if everything else stays the same, the prices of things like metals and crops might stay low. But as I mentioned earlier, unexpected things could change this.
I've been following the price of gold for a long time.
Since I first mentioned that it was a good idea to add Gold to every portfolio, prices have remained firm, and I have many good reasons not to sell the physical gold I have saved up over the years.
During my career, I traded a lot of gold, along with silver, platinum, and palladium, during different periods. I saw gold prices go up a lot when Bunker Hunt tried to buy a lot of silver and then go down when it didn't work. In the early 1980s, when I was a fund manager, we traded a lot of gold and other metals until the excitement faded. In the late 1990s, I saw gold prices drop when crazy Western banks and governments sold their gold, making it cheaper than the cost of producing it. After that, prices started to go up again, mainly because countries in Asia, the Middle East, and Russia were buying it.
People these days are being told to buy gold to protect themselves from rising prices and because of the development of CBDC. I think this is a good idea. Having physical gold and silver is a smart way to keep your money safe outside of the usual banking system. Even though gold prices haven't shot up as many suggested, I'd still rather have precious metals than stocks in my investment portfolio.
Some experts have been saying for a long time that gold could go up to $6,000 per ounce, and now that figure doesn't sound as crazy as it once did. It's been ten years since China told its people to buy gold, and they are sitting on it. Russia has been buying gold and reducing its foreign money for more than ten years. Now, countries like Brazil, Russia, India, China, and South Africa (BRICS) are thinking about using gold instead of the dollar.
For people who believe in gold, it might be frustrating that prices haven't gone up that much yet. But prices have stayed pretty stable lately, and with everything happening in the world, I think it won't take too long before they do start to rise.
I'm not saying this will happen overnight, but when it does, it'll probably happen fast. Right now, the amount of gold stored in London and at Comex are at historically low levels. (Tiny Portugal has more Gold reserves than the UK) Some banks are now taking delivery of the actual gold, instead of rolling their long positions further forward.
I believe, if banks hadn't been bailed out by the tax-payer so many times in recent months and years, precious metals might already be a lot more expensive. None of us want to see more problems with banks, but it's starting to look unlikely that taxpayers will be able to save them forever.
In the end, gold remains a good way to keep your wealth safe, especially for retirement. And the best part is, it's yours no matter what the government does. A long time ago, the U.S. government took people's gold, but things have changed a lot since then. You can choose to put it in your IRA, or you can keep quiet and simply bury it in your garden, the choice is yours.
Now, let's talk about cryptocurrencies. Some people say that Bitcoin (BTC) is just as good as gold, but that's not entirely true. I'm not denying that BTC has its benefits, and I'm thinking about buying again, if the prices ease. But I'm worried that the government is getting too involved in how cryptocurrencies work. This might not be a bad thing, but it's not what the creators of BTC had in mind.
To really grow and reach its full potential, cryptocurrencies, especially BTC, need more people using them for wealth storage and exchange. Letting banks and governments have a big say in how crypto currencies go forward, might take away much of their appeal with the broader public.
I appreciate that young investors want new products and the crypto has a certain attractiveness, which could ultimately provide a very handsome profit. But Gold has been in demand since the day it was discovered and there is no reason to believe this will change in the future.
More importantly, I know many young people have been educated to believe that governments make good laws and act for the benefit of the electorate. But who knows what tomorrow will bring.
When push comes to shove, the only person who is going to look after you and yours is you. And, having access to some physical gold, is a great way to protect yourself in uncertain times.
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