Bull case for Gold

[GodsMoney]

With gold still around all time highs against the pound and, relatively high still across a long time frame against the dollar, what's the bull case that convinces this isn't going south? 

 

For me the high dollar is suppressing the gold price, although its holding up remarkably well and over the next year, the dollar will drop and that could be the catalyst to really see a jump in gold price, especially as current conditions globally are so positive for gold generally IMO

[Ukbullionfan]

Something something Boris Johnson.

[RDHC]

1 hour ago, carrigher82 said:

With gold still around all time highs against the pound and, relatively high still across a long time frame against the dollar, what's the bull case that convinces this isn't going south? 

 

For me the high dollar is suppressing the gold price, although its holding up remarkably well and over the next year, the dollar will drop and that could be the catalyst to really see a jump in gold price, especially as current conditions globally are so positive for gold generally IMO

Surely current prevalent high inflation is not positive for gold? It could of course come down, and probably will in the end.

[GodsMoney]

21 minutes ago, RDHC said:

Surely current prevalent high inflation is not positive for gold? It could of course come down, and probably will in the end.

What's good is that inflation and dollar have rocketed up and the opposite hasn't happened for gold. Its stayed pretty stable in a range which I think denotes a coiled spring waiting to bounce as soon as inflation and the dollar comes down 

[Relm]

It depends on why you are collecting it and the time frame.

 

[sixgun]

14 hours ago, RDHC said:

Surely current prevalent high inflation is not positive for gold? It could of course come down, and probably will in the end.

What does inflation mean?
It means the expansion of monetary supply without an equivalent increase in GDP.
Prices rise as a consequence of inflation (price rises are not actually inflation just a result of it).

Right we see high inflation - so we are likely to see high price rises. Why would gold prices not go up?
Let's say gold were £1500 / ounce - then imagine as a result of inflation general prices doubled every year for 10 years. At the end of that time prices would be over 1000 higher.
Now do we imagine gold would still be £1500 an ounce? 
Inflation means the currency is being dilated in value - it is getting weaker - it is becoming worth less and less, until it is worthless. 
Gold is about preserving purchasing power - high inflation should be when gold gets into top gear.
On another thread i pointed out that if silver had kept up with real inflation in the USA it would be $36 an ounce - i make the case for price manipulation on that basis alone - no-one can say silver is not in high demand, supply is short so its price must be being suppressed.

Edited October 22, 2022 by sixgun

[Mcgrimes]

Bear case - price of everything is increasing, but the market is in a downturn and wages aren’t increasing inline with cost of living, thus less money to spend on precious metals.

Interest rates increasing, thus allowing for higher returns on cash savings, when gold sits there looking pretty without returning anything

[ant1882]

Unless interest rates are above inflation it's a bit pointless, still losing. 

Banks target was 2% inflation, so by default the currency is constantly losing purchasing power over time.

Gold is money, not digits on a screen... given what's happening in the world I prefer real money over anything else.

Edited October 22, 2022 by ant1882

[ant1882]

1 hour ago, Mcgrimes said:

Bear case - price of everything is increasing, but the market is in a downturn and wages aren’t increasing inline with cost of living, thus less money to spend on precious metals.

Interest rates increasing, thus allowing for higher returns on cash savings, when gold sits there looking pretty without returning anything

Given the current general understanding of gold amongst the public this could be the case. 

Not many people have ever mentioned gold and silver to me in my life, it's something I found for myself... but then at the same time it's probably a good idea not to tell everyone about it.

Private wealth.

[sixgun]

5 hours ago, Mcgrimes said:

Bear case - price of everything is increasing, but the market is in a downturn and wages aren’t increasing inline with cost of living, thus less money to spend on precious metals.

Interest rates increasing, thus allowing for higher returns on cash savings, when gold sits there looking pretty without returning anything

But the handful of coins bought by people like us is just a handful of coins. There are entities out there buying tonnes of it. Imagine 1.4 billion Chinese digging into their pockets for a few bits of gold. Imagine 1.4 billion Indians doing the same. Many of the right minded central banks are buying gold. Russia and China continue to accumulate thousands of tonnes. Russia dropped the sales tax on gold this year to encourage citizens to buy more. Physical demand is huge. That most of the people on your street haven't got a clue about gold just shows that decades of brainwashing works for 75% of people. Thank God you are in the other 25%.

Edited October 22, 2022 by sixgun

[Mcgrimes]

5 minutes ago, sixgun said:

But the handful of coins bought by people like us is just a handful of coins. There are entities out there buying tonnes of it. Imagine 1.4 billion Chinese digging into their pockets for a few bits of gold. Imagine 1.4 Indians doing the same. Many of the right minded central banks are buying gold. Russia and China continue to accumulate thousands of tonnes. Russia dropped the sales tax on gold this year to encourage citizens to buy more. Physical demand is huge. That most of the people on your street haven't got a clue about gold just shows that decades of brainwashing works for 75% of people. Thank God you are in the other 25%.

I think gold will lag behind as interest rates begin to rise further. I think institutions be be more inclined to lock in at 5% apr rather than chase gold which has an annual fee to store.

I don’t think gold is analogous to money, as mentioned further up - not any more than any other commodity is at least. 

im here because I like gold and hold some in my portfolio, and whilst I want it to shine in the upcoming short term, I don’t think it will compared to other asset classes.

Who knows how to invest in grain/wheat/food futures?

[sixgun]

33 minutes ago, Mcgrimes said:

I think gold will lag behind as interest rates begin to rise further. I think institutions be be more inclined to lock in at 5% apr rather than chase gold which has an annual fee to store.

I don’t think gold is analogous to money, as mentioned further up - not any more than any other commodity is at least. 

im here because I like gold and hold some in my portfolio, and whilst I want it to shine in the upcoming short term, I don’t think it will compared to other asset classes.

Who knows how to invest in grain/wheat/food futures?

What are institutions locking into to get 5% APR?
If you are talking about bonds - then you should know bonds are in a bear market. They were in a bull market since around the mid 1980's - now they are in a bear market. i saw Mario from Maneco64 say the bond bear market will last until the mid 2030's. Mario used to be a City bond trader. That being the case there will be crushing capital losses in bonds which aren't even yielding enough to cover inflation. 

Gold is money. Even the Bank of England calls gold 'commodity money'.
https://www.bankofengland.co.uk/KnowledgeBank/what-is-money
Gold is money and everything else is credit - JP Morgan said this and he was right. You cannot print money, only create more credit - that's currency.

Investing is long term. Futures are short term - if you look at a lot of commodity ETF's they don't perform that well, this is because they invest in futures in which the time premium erodes over time so their value as compared with spot doesn't do as well. They are fine for trading but not strictly investing.

The Global South for sure see gold as money - it is cultural. They have seen their own currencies inflate away to nothing whilst the gold they hold has held its value.
BRICS will introduce a commodity currency - gold is the major component. 
https://fintechs.fi/2022/07/25/brics-nations-plan-to-create-a-new-international-reserve-currency/
China has had a gold trade note for several years now. https://www.gold-eagle.com/article/gold-trade-note-sighted
China is trading oil with the Petro-Yuan contracts convertible to gold on the Shanghai Gold Exchange. 

Cash has become trash. Gold is becoming the go to - the alpha and omega. 
You can get a yield on gold - i for sure get a yield on my gold held inside the Kinesis Money System. i can trade it, save it with a yield and spend it on a debit card. 
Gold has entered the 21st century on blockchain tracks.

[Mcgrimes]

13 minutes ago, sixgun said:

What are institutions locking into to get 5% APR?
If you are talking about bonds - then you should know bonds are in a bear market. They were in a bull market since around the mid 1980's - now they are in a bear market. i saw Mario from Maneco64 say the bond bear market will last until the mid 2030's. Mario used to be a City bond trader. That being the case there will be crushing capital losses in bonds which aren't even yielding enough to cover inflation. 

Gold is money. Even the Bank of England calls gold 'commodity money'.
https://www.bankofengland.co.uk/KnowledgeBank/what-is-money
Gold is money and everything else is credit - JP Morgan said this and he was right. You cannot print money, only create more credit - that's currency.

Investing is long term. Futures are short term - if you look at a lot of commodity ETF's they don't perform that well, this is because they invest in futures in which the time premium erodes over time so their value as compared with spot doesn't do as well. They are fine for trading but not strictly investing.

The Global South for sure see gold as money - it is cultural. They have seen their own currencies inflate away to nothing whilst the gold they hold has held its value.
BRICS will introduce a commodity currency - gold is the major component. 
https://fintechs.fi/2022/07/25/brics-nations-plan-to-create-a-new-international-reserve-currency/
China has had a gold trade note for several years now. https://www.gold-eagle.com/article/gold-trade-note-sighted
China is trading oil with the Petro-Yuan contracts convertible to gold on the Shanghai Gold Exchange. 

Cash has become trash. Gold is becoming the go to - the alpha and omega. 
You can get a yield on gold - i for sure get a yield on my gold held inside the Kinesis Money System. i can trade it, save it with a yield and spend it on a debit card. 
Gold has entered the 21st century on blockchain tracks.

If you hold a bond to maturity, then there are no capital losses (assuming purchased below PAR). Bear markets present opportunity. For what it’s worth, I hold some PAXG in Nexo at 7% APY. Kinesis charges a transaction on purchases (I believe), which covers you selling your gold to an intermediary and then using the cash to pay for your product. Gold is not money; it may be used as a currency in areas with poor fiscal policies, but then so is farm stock. 

As I say, I like gold, but it doesn’t yield. Your gold holding in kinesis entitles you to a share in transaction fees on the platform. I looked into Kinesis but decided it wasn’t for me. Though I was interested in the physical redemption side.

honestly speaking, I think cash is king at the minute - I think there’ll be some bargains to be had when everyone feels higher rates on their mortgages, utility bills and food price increases. Gold has no comparable utility.

Long term, yes, gold is a great investment vehicle in a diversified portfolio. But I’m bearish in the near term on many things including gold. Worth noting gold has dropped about 20% in the past few months, so the market is certainly bearish.

 

 

[sixgun]

20 minutes ago, Mcgrimes said:

If you hold a bond to maturity, then there are no capital losses (assuming purchased below PAR). Bear markets present opportunity. For what it’s worth, I hold some PAXG in Nexo at 7% APY. Kinesis charges a transaction on purchases (I believe), which covers you selling your gold to an intermediary and then using the cash to pay for your product. Gold is not money; it may be used as a currency in areas with poor fiscal policies, but then so is farm stock. 

As I say, I like gold, but it doesn’t yield. Your gold holding in kinesis entitles you to a share in transaction fees on the platform. I looked into Kinesis but decided it wasn’t for me. Though I was interested in the physical redemption side.

honestly speaking, I think cash is king at the minute - I think there’ll be some bargains to be had when everyone feels higher rates on their mortgages, utility bills and food price increases. Gold has no comparable utility.

Long term, yes, gold is a great investment vehicle in a diversified portfolio. But I’m bearish in the near term on many things including gold. Worth noting gold has dropped about 20% in the past few months, so the market is certainly bearish.

True if you hold until redemption you will get the issue price. If you buy 10 year Gilts right now you will get 4.06%. That's locked in. If the issue yield was 2% then potentially there is a 100% capital gain at maturity. i see UK inflation according to RPI is 12.6%. So it isn't keeping up. If you need to sell out before maturity and interest rates have risen then you will be looking at capital losses.

With Kinesis you sell the gold on the Kinesis Exchange. You sell to whoever is buying, it is like any exchange. It might be me who buys. There are market makers. The buy and sell transaction fee is 0.22%. This is slightly offset by the velocity yield you will get for having traded. 
i posted a video the other day where a friend of mine bought a phone on the internet, bought milk and bread, sweets and dog food in the shops on the virtual debit card he is involved in beta testing. So it is being used as currency right now in the UK which is somewhere with poor fiscal policies. If you can buy it with a debit card then you can buy it with Kinesis.

So my point is gold is money and there are ways to spend it just like cash. Cash has lost 12.6% of its purchasing power this year. Personally i see crypto as gambling - i see most of them going to nothing at some point.

Edited October 22, 2022 by sixgun

[Mcgrimes]

4 minutes ago, sixgun said:

True if you hold until redemption you will get the issue price. If you buy 10 year Gilts right now you will get 4.06%. That's locked in. If the issue yield was 2% then potentially there is a 100% capital gain at maturity. i see UK inflation according to RPI is 12.6%. So it isn't keeping up. If you need to sell out before maturity and interest rates have risen then you will be looking at capital losses.

With Kinesis you sell the gold on the Kinesis Exchange. You sell to whoever is buying, it is like any exchange. It might be me who buys. There are market makers. The buy and sell transaction fee is 0.22%. This is slightly offset by the velocity yield you will get for having traded. 
i posted a video the other day where a friend of mine bought a phone on the internet, bought milk and bread, sweets and dog food in the shops on the virtual debit card he is involved in beta testing. So it is being used as currency right now in the UK which is somewhere with poor fiscal policies. If you can buy it with a debit card then you can buy it with Kinesis.

So my point is gold is money and there are ways to spend it just like cash. Cash has lost 12.6% of its purchasing power this year. Personally i see crypto as gambling - i see most of them going to nothing at some point.

Your KAU isn’t gold, it’s a certificate of ownership. You’re not spending gold, you’re selling your right to a portion of gold to someone who transfers Fiat to your seller, for a fee! Have you considered Nexo?

Gold has lost 20% this year which makes it weaker than the pound. 

i wouldn’t expect inflation to be double digits forever - the whole purpose of rising rates is to arrest inflation. 

 Don’t forget that KAU, existing on a blockchain, is a cryptocurrency that represents ownership of gold. And blockchain is not infallible, so holding KAU is a risk that is rewarded by a portion of Kinesis profits.

And to be clear, I actually like this system of ownership - I think the shares market should be operated on a blockchain and let run 24/7!

[ant1882]

6 minutes ago, Mcgrimes said:

Your KAU isn’t gold, it’s a certificate of ownership. You’re not spending gold, you’re selling your right to a portion of gold to someone who transfers Fiat to your seller, for a fee! Have you considered Nexo?

Gold has lost 20% this year which makes it weaker than the pound. 

i wouldn’t expect inflation to be double digits forever - the whole purpose of rising rates is to arrest inflation. 

 Don’t forget that KAU, existing on a blockchain, is a cryptocurrency that represents ownership of gold. And blockchain is not infallible, so holding KAU is a risk that is rewarded by a portion of Kinesis profits.

And to be clear, I actually like this system of ownership - I think the shares market should be operated on a blockchain and let run 24/7!

How has gold lost 20%?

£GBP is -16% YTD against $USD

[Mcgrimes]

4 minutes ago, ant1882 said:

How has gold lost 20%?

£GBP is -16% YTD against $USD

But gold has dropped from $2000 in March to $1650 today - that’s nearly 20%

Edited October 22, 2022 by Mcgrimes

[ant1882]

1 minute ago, Mcgrimes said:

But gold has dropped from $2000 in March to $1650 today - that’s nearly 20%

Oh you mean in $USD, yeah not far off 20%

Shame we don't have that discount here in the UK I'd be buying more 🙂

[Mcgrimes]

1 minute ago, ant1882 said:

Oh you mean in $USD, yeah not far off 20%

Shame we don't have that discount here in the UK I'd be buying more 🙂

Haha yeah, gold has been weak lately, but we don’t get the benefit because the pound is also weak!

 Bring on the bear market, I want more gold!

[ant1882]

$USD (DXY) has been in a big uptrend since May 2021, because it's measured against other basket-case currencies which are failing (being inflated) at a faster rate (Euro, GBP, YEN).

Question is what will make the dollar drop? Currently at 111 with historical high of 120 in 2000/2001 and 160 in 1985.

Edited October 22, 2022 by ant1882

[sixgun]

31 minutes ago, Mcgrimes said:

But gold has dropped from $2000 in March to $1650 today - that’s nearly 20%

Gold was £1308 on 25th October 2021 - it is now £1,467. That's an increase of £159 which is a 12.2% increase over the year. As i said RPI stands at 12.6% - so gold has preserved purchasing power just about. Holding cash and you've lost 12.6% of purchasing power.
This is the true annual rate - you can pick points in time to make your case because you want to make a particular case.

Kinesis uses the blockchain ledger to record ownership of gold and they call these KAU's. No they aren't gold, they are the blockchain entries of your ownership.
You look at your bank account - it might say £1500.25. This is a digital record of your claim on currency at your bank. It isn't your currency, it's the bank's currency but it is a record of your claim. Everything these days has gone digital. This is an argument made against precious metals, that they are impractical - you can't go to Tesco's with a sovereign and spend it. This is true, the cashier won't take the sovereign despite it being legal tender. When gold and silver are put on blockchain rails you can do that. You can spend fractions of that 'sovereign' in multiple currencies.

The KAU's do not receive a yield because of risk. They receive a yield because you took part in the Kinesis Money System. The transaction fees are added together for the month and divided between several yields. Kinesis keeps some to run the system and develop it. The rest goes to the users and KVT holders.

The holders' yield for KAU and KAG, the minters' yield for KAU and KAG, the velocity yield for those trading KAU and KAG, the referrers' yield and a few others. Then there is the KVT yield which hasn't paid out yet but is accruing. This is the risk capital - this was the money which kick started Kinesis off.  i'm not saying what my yields are to date other than it adds up to several ounces of gold and even more in silver.

i haven't considered Nexo or anything else - i don't like cryptos except i have managed to deal with Kinesis having been with it since the very beginning, in fact before the very beginning. i am not trialling the virtual debit card - that would be on my phone and i don't like mobiles and would not really trust myself. i like to have a plastic card so i will wait.

Edited October 22, 2022 by sixgun

[Mcgrimes]

13 minutes ago, ant1882 said:

$USD (DXY) has been in a big uptrend since May 2021, because it's measured against other basket-case currencies which are failing (being inflated) at a faster rate (Euro, GBP, YEN).

Question is what will make the dollar drop? Currently at 111 with historical high of 120 in 2000/2001 and 160 in 1985.

It’s all relative - so better fiscal policies like rising rates and would help other countries. But then, weaker currency actually increases foreign investment etc etc

[ant1882]

4 minutes ago, Mcgrimes said:

It’s all relative - so better fiscal policies like rising rates and would help other countries. But then, weaker currency actually increases foreign investment etc etc

Floating currency exchange rates are bound to be chaotic I suppose.

Edited October 22, 2022 by ant1882

[Mcgrimes]

5 minutes ago, sixgun said:

Gold was £1308 on 25th October 2021 - it is now £1,467. That's an increase of £159 which is a 12.2% increase over the year. As i said RPI stands at 12.6% - so gold has preserved purchasing power just about. Holding cash and you've lost 12.6% of purchasing power.
This is the true annual rate - you can pick points in time to make your case because you want to make a particular case.

Kinesis uses the blockchain ledger to record ownership of gold and they call these KAU's. No they aren't gold, they are the blockchain entries of your ownership.
You look at your bank account - it might say £1500.25. This is a digital record of your claim on currency at your bank. It isn't your currency, it's the bank's currency but it is a record of your claim. Everything these days has gone digital. This is an argument made against precious metals, that they are impractical - you can't go to Tesco's with a sovereign and spend it. This is true, the cashier won't take the sovereign despite it being legal tender. When gold and silver are put on blockchain rails you can do that. You can spend fractions of that 'sovereign' in multiple currencies.

The KAU's do not receive a yield because of risk. They receive a yield because you took part in the Kinesis Money System. The transaction fees are added together for the month and divided between several yields. Kinesis keeps some to run the system and develop it. The rest goes to the users and KVT holders.

The holders' yield for KAU and KAG, the minters' yield for KAU and KAG, the velocity yield for those trading KAU and KAG, the refers; yield and a few other. Then there is the KVT yield which hasn't paid out yet but is accruing. i'm not saying what my yields are to date other than it adds up to several ounces of gold and even more in silver.

i haven't considered Nexo or anything else - i don't like cryptos except i have managed to deal with Kinesis having been with it since the very beginning, in fact before the very beginning. i am not trialling the virtual debit card - that would be on my phone and i don't like mobiles and would not really trust myself. i like to have a plastic card so i will wait.

I have a feeling that with increased adoption of the debit card, transaction fees across the platform will begin to increase to cover the fiat cost of doing business with plastic cards. Fee free transactions don’t exist, and you may have heard about the drama with crypto.com cards and subsequent reduction of card perks. It’s happened with a few other providers.

 But still, my point remains - bearish near term!

[RoughDog]