Gold

Nickname
Midas Metal
Parent Asset Class

Gold is a precious metal that is commonly considered the purest form of money

Asset Classes

Fiat Currency
Precious Metals

Entities

Adamant Capital
Advantage Gold
Agora Financial
Ark Financial Management
Asbury Research
Black Snow Capital
BullionStar
CPM Group
Capital Management Group
Central Bank Gold Agreement
Coro Global
CrossBorder Capital
Edelweiss Holdings
Elliottwave Forecast
Equity Management Associates
Fundamental Research Corp.
GBI
Gold Anti-Trust Committee
GoldSilver
Goldmoney
Hard Assets Alliance
IceCap Asset Management
Idaho Armored Vaults
Ivanhoe Mines
Jefferson Financial
Katusa Research
Kinesis Money
King World News
Louis James LLC
McEwen Mining
Monetary Metals
Neptune Global
Northern Dynasty Minerals
Palm Beach Research Group
PureXposure Growth Series
RiskHedge
SPDR Gold Trust
Shanghai International Energy Exchange
Solaris Resources
Sprott Asset Management
Sprott Gold Miners ETF
Sprott Physical Gold and Silver Trust
Sprott U.S. Holdings, Inc.
State Street Global Advisors
Strategic Wealth Preservation
Streetwise Reports
The Electrum Group
The Market Chartist
The Morgan Report
Tocqueville Bullion Reserve
True Insights
U.S. Global Investors
VON GREYERZ AG
VanEck Vectors Gold Miners ETF
Wheaton Precious Metals
iShares Gold Trust

Events

1933 Gold Ban
2011 Ron Paul Fed Monetary Report Grilling
Bretton Woods
Gold Reserve Act of 1934
Panic of 1837
Petroyuan
The Mississippi Bubble

Locations

Central Lapland Greenstone Belt
Charlotte
North Carolina Gold Fields

Industries

Mining

Terms

BANG Stocks
Crisis Currency
Gold Bug
Gold to Silver Ratio
NYSE Arca Gold BUGS Index
Treasury General Account
Gold

Book

2014


Reasons to Own 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
  • 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)

Negative Aspects of Gold (What Gold Bears Say)

Gold Price
There are many gold price drivers that all reflexively interact
  • 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)
  • 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
Another Way to Think About Gold
  • People usually think about gold as to how much it is worth in their home 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
Major Gold Purchasers

Gold Characteristics (that make it valuable and a good form of money):

Fun Gold Facts:

Real World Gold Lessons
  • 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


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.