Gold ~ The Ying and the Yang
I sit at the table with people weekly, or get messages from friends daily about Gold, usually a sign its frothy and you should get out, i.e when the pleb on the street tells you to invest in something, it usually means they are late getting out, or you will be late getting in.
The thing about Gold, is that it’s actually not a investment, its a wealth presevation tool, not from “inflation” commonly referred to CPI but monetary inflation, however it must be said that the US did substantially well when they repressed the price of Gold via the QE era (2013-2021/22) - what you will notice is that during that era, something else was done that had never occurred in 5,000 years of recorded history - near negative or negative interest rates - read the following (buy it) and you’ll learn about interest rates going back to the dawn of Civilization.
I won’t put charts up showing how gold was repressed you can simply login to Terminal and do that yourself.
What i wanted to show is that, in essence i don’t believe people grasp just how much gold will move in the future (nominally - you’ll just be able to buy the same shit approx.).
The following chart is US Debt (Federal) as a Ratio to Gold, you can be forgiven to recognize that main-street (US) hasn’t really entered the Gold markets, its been driven by a number of factors
China debasing it’s domestic debt (whilst maintaining a range with the Dollar on its currency).
US Federal Deficit/Debt & concerns about the Weaponizing of US Treasuries/Equities/Dollar.
Emerging War (driving up allocations to metals and wealth preservation).
Which is following the demographics issue in the US i.e see the following article and apply to the US, or this article as similar all just playing out on different timespans, as you can see below NA (incudes Canada, Mexico) Births YoY inverted and shifted forward 9 Yrs vs Gold YoY.
Now looking at the Chinese side (main catalyst), first we go at Debt/Gold YoY (%)
And side by side with China’s GDP (Fred)
Now we look at China Government Debt / Gold (ratio), you’ll notice they’ve over the years since the GFC attempted to contain a trend in a specific range without allow it to surpass (come out of that trend, during Covid that broke — first down then up violently, to which they’ve in 2022 commenced a debasement of the Debt in Yuan (CNY - onshore) by buying up gold
Here we have China Central Bank Gold Reserves and the YoY% as you can see historically China buys Gold when it needs to debase its debt to revitalize its domestic economy or debase its debt - 2008, 2015, 2022.
In the following chart you have CNY/USD inverted v’s Gold USD
As you can see in the following chart PBoC Liquidity (China Central Bank) lags Gold Price $ terms, the Chinese Yuan above v’s US Dollars has broken down (up as its inverted) whilst Gold has broken up.
In the following chart you have Chinese GDP (YoY) vs PBoC Assets (YoY) with the Credit Impulses (liquidity injections) leading.
What you have is Debt → Buy Gold → Onshore Yuan debt debased against Gold → offshore Yuan range retained in commodity terms onshore Yuan destroyed (= productivity rises due to cost to market goods cheaper exports) → Assets on PBoC Balance Sheet rise lagging Gold, debt deflation, economic productivity increase, maintain range in currency export ($).
In essence the US goes through a range of debasing the $ against Gold or Strengthening against Gold — the Ying, the Chinese use the same approach to buy up Gold with a closed currency account debase their internal debt (and currency — supported by the US debasing its currency) to revitalize its economy — starve off deflation, and have a productivity boom by reducing their export cost(s) — the Yang.
Or depicted below how the Global Economy function(s) in the context of the Ying, and the Yang.
So Gold will continue to rise but it will also revert within its debt/gold ratio, but then it will revert again, for the cost of storage and a outlook of 10,000$ an ounce over the next decade, it would be prudent to continue stacking.
Just do not have the same conviction in silver as thats a industrial metal, there’s a shortfall, the demand is rising, but there’s speculation there so be careful not to hold a hot potato.