The Old Man and Old Investment Products

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This post was originally published on Trademakers

Banging the drum about owning gold has been part of my reports for over two years. While we have seen various new digital products come and go, such as NFTs and land in the metaverse, over this two-year period, gold has outperformed most “here today, gone tomorrow” products because the masses understand gold.

Gold is the only “real” money due to its inherent characteristics, making it a reliable store of value throughout history. Gold maintains its intrinsic value over time, unlike fiat currencies, which are subject to inflation and governmental manipulation. Its scarcity, durability, divisibility, and universal acceptance as a medium of exchange give it unparalleled stability in the financial world. Moreover, gold has been a currency for centuries, transcending geographical and cultural boundaries. These qualities make gold the ultimate hedge against economic instability and a timeless symbol of wealth preservation.

 

That has been the situation throughout history, and despite the advent of various financial instruments and the arguments of short-term politicians and central bankers, gold has stood the test of time.

 

Empires have come and gone, technology has consistently forged ahead – currently at an alarming pace – and we have experimented with all kinds of economic policies, even outlawing the ownership of the shiny stuff. But no matter what has happened over the past few hundred years or a few thousand years, owning gold still represents wealth to everyone.

I understand that for many young investors, Bitcoin is the gold of the future and something they crave much more than gold because of recent hype. But there is one thing I do know, which they seem to ignore in their blind optimism: Gold will still be valuable in 5 and 10 years. I don’t know what the situation will be for BTC, even next year, and quite frankly, neither does anyone else.

 

I remember at the turn of the millennium when central banks dumped their gold and collapsed the price, and admittedly, back then, I bought into the argument that the idea of owning gold was no longer as solid as it once was. But I was wrong; what has happened to gold since then has proven that.

 

The turn of the millennium was also when the Internet went ballistic, and it did so without the help of yet-to-be-invented social media (indeed, back then, there were no smartphones and not even messaging!).

 

Today, gold and BTC are hitting new ATHs. But Facebook’s collapse reminds me that online content will never be as reliable as content you can hold physically and pass from one person to another.

 

Over twenty years ago, we were all convinced that government bonds were the best thing to own. Then came the debt bubble in 2007/08, and no one wanted Greek, Portuguese, Irish, or Spanish government bonds, not for love or money!

 

As we go forward, we will see all kinds of changes in our world of finance, and as we all know, with CBDC, many changes will not be positive or beneficial. Because of this uncertainty, we need to be very careful about developing new financial instruments, especially now that AI is about to become a big part of the development of everything in the future.

 

So, serious investors are left with one question: What product has proven the best asset to hold over the long term? Without any doubt, this must be gold.

 

Other commodities have always had value and a long history, but none can be called money (perhaps silver might be the exception). However, as a firm believer in diversified portfolios, unfashionable commodities should always be investigated and, when possible, incorporated into a diversified portfolio.

Gold and Oil are often the preferred commodities because of their direct links to inflation and as indicators of the economic climate. But there are so many other commodities that offer potential to both prudent and more speculative players.

 

Bitcoin and gold have recorded historic highs this week, but so has Cocoa. The rally in Cocoa has been equally impressive as the much-heralded rally in BTC.

 

Suppose you are a forex trader flogging a dead, dull horse for two years. If you look at the volatility in any commodity over the same period, you will quickly realize that commodities have offered better trading and speculating opportunities than EURUSD.

Despite the rallies in gold and Cocoa discussed, the values of many other commodities are very depressed due to the poor economic outlook and a general lack of investor interest. Any surprises in these markets should promote a firming of prices, with one or two commodities sitting with much pent-up potential.

 

When watching what is happening with European farmers, agriculture is starting to look interesting.

The post The Old Man and Old Investment Products first appeared on JP Fund Services.

The post The Old Man and Old Investment Products appeared first on JP Fund Services.

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