Gold

• It provides and option on the unexpected (typically goes up during crisis)
• Can provides protection from adverse monetary and credit events
• Tends to perform well as a "flight to safety" when financial markets panic
• Can provide protection from low, negative or otherwise artificially low rates
• Gold tends to preserve wealth and value over time
  • It may go up or down in the short term when compared to a fiat currency
  • Over time gold tends to gain in value (compared to currencies) as fiat currencies depreciate
• Has been used by multiple civilizations over Millenia
• Consider to be a "crisis currency" - retains value when other markets are in a crisis
• Gold is an investment in failed monetary policies (monetary disorder)

• Gold does not yield anything - it pays no interest
• Gold costs money to store and secure
• Gold offers more yield than negative yield sovereign debt
• The price will go up once people understand the consequences of ultra-low interest rates (circa late 2018)
• Only has minor industrial uses - some electronics and chemistry

• Gold tends to move inversely to real interest rates
• As rates rise, the US dollar tends to rise
• Gold tends to fall as the US dollar goes up
• More correlated with real rates vs. nominal rates
• Higher rates make treasuries and bank deposits more attractive to investors (reducing the demand for gold) (gold has no yield)
• Tends to mover inversely with the base money supply (more money = more inflation = higher gold price)
• Quantitative Easing may negatively impact the price of gold
• Can also be impacted in the short-term by paper trading of gold futures
• Demand for physical gold also drives the price
• Even if other macro factors are negative (rising rates, rising dollar), the price of gold can go up if there is sufficient demand from physical buyers.  Only a small amount is mined each year, so purchases of physical gold can drive the price up. 
• Gold mining output is relatively flat - it takes years/decades to increase it in times of high demand
• Gold does well when investors lose confidence in the future returns offered by stocks, corporate bonds & other paper assets
• Tends to do well when the Fed is cutting rates
• 35% gain during 2000 - 2003 rate cut cycle
• 43% gain during 2007 - 2008 rate cut cycle
• Conventional thinking says gold thrives under inflation and declines under deflation. 
• Also need about gold in regards to it's purchasing power of consumer goods

• People usually think about gold as to how much it is worth in their home currency
  • Thy effectively make their home fiat currency most important
  • Gold will fluctuate in price with regards to the home currency (or any currency)
• Instead, investors may want to think of gold in terms of physical quantity
  • This gives gold the priority instead of the US dollar
  • Helps remove worries about the ups and downs gold has with currency changes
  • At the end of the day, the physical amount of gold you have is most important\
• Example: Instead of thinking that you have $1,000 worth of gold in US dollars, think that you have 1 ouce of gold out of a slowly growing world supply

• China Central Bank (circa 2018)
• Russia Central Bank (circa 2018)
• Kazakhstan, India, Mexico, Turkey, Iran, Egypt (circa 2018)
• Central Banks (including UK, Switzerland, IMF) were big sellers in 1990s and 2010s
• There have been few Central bank sellers since 2010
• Hungary is increasing its gold (10x increase from 1986 to 2018)
• Poland is buying since 2018

• Gold is rare
• Gold is beautiful
• Gold is ductile
• Gold is divisible
• Gold is durable
• Gold is dense
• Gold is stateless
• Gold is unhackable
• Gold is unforkable

• Only 1–3% of U.S. households own any gold, aside from jewelry — this according to Adam Taggart in a note at Peak Prosperity

• The gold from shipwrecks that took place hundreds or thousands of years ago is still very very valuable and coveted.  What other asset could hold it's value like that while under the ocean for hundreds of years?

Ways to Hold Gold

There are multiple ways one can hold gold an asset:

• Purchase and store coins/bars at home
• Purchase and store coins/bars with third party vaults
• Invest in ETFs, Funds and Trusts that hold gold (allocated or un-allocated)
• Etc, etc. etc.

Gold During Equity Bear Markets

• Gold & Gold mining stocks tend to fall along with equities as holders are forced to sell Gold due to margin calls or panic
• Gold then tends to rebound and do better as Central Banks reduce interest rates and/or increase quantitative easing.

2011 - 2015 Gold Bear Market

• Began in Sep 2011 with gold at $1,900 per ounce
• Ended in Dec 2015 with gold at $1,050 per ounce
• One of the biggest drops in gold price (over a short time)
• May be a "correction" in a longer-term bull market

1980 - 1999 Gold Bear Market

• Price dropped from $800 per ounce to $200 per ounce over 20 years
• Some minor rallies in the middle

Gold Production Levels

• New gold deposit finds are becoming rare (2018)
• Gold mining output has been relatively flat the last few years (2016 - 2018)

Gold & Central Bankers

• Although central banks hold gold, they refuse to admit that it is real money publicly
• They have tried to downplay gold in favor of fiat currencies
• Central bankers don't want people to prefer gold, or else depreciating paper currencies will fail
• Central banks are built on debt and paper currencies
• Gold is a barometer of hte value of fiat currencies - Central Banks don't want people to realize this and see how much inflation has occurred
• Gold forced disciple on how much Central banks could print before 1971 (when Gold-dollar link was broken).  They don't want to go back to this.