Paper gold predicament and bullish on physical gold anticipating the inevitable market crash
There is no stock on shelves. That phrase itself gives you an idea about the current state of the tradable price of gold at the moment. Since July of 2020 gold has been trading at almost a very "stable" price of around $2000 per ounce. The biggest spike was in July of 2020 at around $2070 and since then has been fluctuating around +/-$500 range.
I see gold doubling and hitting at least $4000 per ounce within the next couple of years.
The biggest amount of trades is made on paper gold. There is hardly any physical gold to push through to all who are interested. A simple skim through World Gold Council shows that the amount of gold mined and the amount of gold traded has a huge difference.
At any given time, in recent years, the volume of gold traded is at the bare minimum at least 10-15 times higher than mined. It is incredibly tough to google credible sources for exact numbers of total mined. But ETFs, options trading, futures, gold contracts, let's even throw CFDs in there, the amount of paper gold is highly inflated.
Since COVID, the U.S. alone has injected a lot of money into the economy. Stimmys, relief, bail out, whatever. A lot of printing and lending and giving. How much is the inflation percentage? Apparently, that is up to debate. See here.
Obviously, the buying power keeps going down, U.S. or anywhere else. Prices will stack up and we have seen prices soaring consistently. The aim to "cool down the markets" has seemingly worked but I don't see how it will stay calm. Will we also have a rerun on the "mortgage shenanigans"?
Once the interest rates start growing we will eventually have to experience bankruptcies, corporates shutting down, the market taking a beating, housing crisis, and a fully fledged economic crash.
Meanwhile, the paper money still needs to maintain "trust" and hence there always is some amount of gold still held as a guarantee. But when the tipping point arrives, and it will, the paper gold that is rampant everywhere will now have a rising urge to turn into physical. Gold is money, more than an investment here.
War, pandemic, elections, inflation, bankruptcies, and a cocktail or single-serve of many other things can trigger huge movements in gold prices. I don't see gold holding its current "stable" state for long. When that happens paper gold will start a downfall upon liquidation or evaporation and cause an uptrend for physical gold.
Bullions are a good option for people with deeper pockets, there are plenty of places to start purchasing and storing. However, buying gold bars, coins, or as I prefer jewelry, are still a solid choice. I dove into silver but only later learned the price is much more controlled than gold and manipulated.
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