22 Comments

  1. I don’t have the number for global debt in 2019, but I believe it stood at $233T in Q3 of 2017.

    The reason I bring this up is a number for debt of around $120T was mentioned for the U.S.; however, global debt has increased due to borrowing by governments, companies, and households, and in addition, to this several central banks have been printing money in order to maintain their respective currencies as a cheap means of exchange when conducting international trade to promote the goods and services sold from within their borders.

    A second reason for printing money has been Q.E. and asset purchases by central banks.

    Both (debt and printing money) expand the size of the money supply, and both increase the rate of inflation.

    In addition to this, the ECB & the BOJ have a negative interest rate policy – the ECB since the summer of 2014 and the BOJ since early 2016.

    This, third factor, negative interest rates, has been promoted to increase lending to businesses; however, it has another side effect. People who deposit money in a savings account expect some earned interest in return. When this does not happen, then they look for alternatives. Keep in mind that the number of savers in Europe and Japan is not a small number, and in addition, culturally, people in these areas tend to be strong savers for various reasons.

    Traditionally, people in Japan and the EU would look to real estate as an alternative investment for savings; however, the demographics don’t work in some of these countries given that the population size has been contracting for a while, and this reduces RE demand. In fact, in Japan and Italy, for instance, you can buy RE quite cheaply today. Several cities in Italy, for example, have adopted a policy of selling homes for one euro, and in Japan you can get homes for free as long as you move in to them. For these reasons gold is an attractive alternative as a store of value and protection from deflation in RE values.

    Your guest mentioned that gold paid no interest; however, some people (I believe) appreciate its ability to keep up with inflation, and this opens up a new group of people willing to purchase gold rather than see the value of their savings decrease over time.

    I would add to this that unlike central banks which store gold people have a second use for gold. They can wear it as jewelry in addition to storing it.

    These three factors (debt, currency printing, negative interest rates) are meeting in the same direction in terms of maintaining the real value of gold versus all currencies and increasing the demand for the same.

    These three factors can be added to the Basel 3 Tier 1 demand. For me this adds up to four important factors that as a minimum maintain upward pressure on gold prices.

  2. lots of people were talking about the change at Basel making gold a tier one from a tier three asset. Also it has been a common topic on Youtube along with many of the central banks around the world buying gold. Nothing new here.

  3. well said, back up the truck and load the metals guys! gold at 1640 7 year high while i type this. and guess what…I'm buying more this weekend. EASY 2,500 spot for Gold coming. EASY. If some of the things mentioned happen Gold will be $10K USD, Silver $500

  4. I think Bit Coin is for the millennial generation and Gold is for baby boomer. I'm voting with the baby boomers and I buy Gold and Gold Miner stock, as the baby boomers have all the money and will be piling into Gold just as the Central banks are. Our course, the whole Gold thing is really nuts, digging up vast swaths of the Earth to obtain the shinny metal and then stacking it in vaults, a metal that has no significant industrial use, is ludicrous in our modern age, however, human beings are just as devious and deceptive as they have always been, especially those so called smart ones that are in control of the money printing presses and the Financial Alchemy system, so we still need a recognized long term store of REAL value to defend us from them and the over spending vote seeking politicians, we have to retain the value of our wealth for retirement and Gold is the one asset that seems to fit this need. If our currencies were honest, we wouldn't be forced to use Gold.

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