Global Analysis from the European Perspective. Preparing for the world of tomorrow




Gold trades at an all-time high in nearly all leading currencies

Between 2000 and 2010 the price of gold in dollars quadrupled and since then it has increased by 50%. By way of comparison, from 2015 to 2019 the price of bitcoin rose by 3000%. Gold may soon follow suit and trade at 45.000 dollars an ounce by the end of 2020. What is possible for the digital currency is also possible for gold. Which is not to say that we know what the precise worth of gold will be: what we hold for sure is that the price of this metal will only soar.

In the Gefira bulletin, we have explained in detail the root cause of the economic and financial problems in the Western world.

The production capacity in the most economically advanced nations is collapsing. Between 2020 and 2030 the white Europeans and East Asians will be leaving the workforce in droves, while the number of retirees will be growing. The global population is increasing at a staggering pace, but the populations that have shaped the modern world are shrinking. Neither the left and nor the liberals dare to touch this subject. Either maintains that all ethnic groups are the same and all individuals are equal. If such is the case – they say – we can import people to Europe or the United States from the Third World and thus solve the problem. This claim is not substantiated by any evidence. The disappearance of the Germans, French or English will mean that the vibrant economies created by them in Europe and on other continents will disappear as well. The same holds good for Japan.

We have written extensively in the Gefira bulletin that the demographic changes will have economic and – consequently – political consequences. What we are facing is plain to see, which is why Washington – the Trump administration not excluded – wants to prevent the demise of the American population by accepting 1 million legal immigrants a year. The point is that the Mexicans and white retirees that will soon make up the US population are no economic match for the Chinese. Europe will become an ethnic and religious tinderbox. Germany looks like a retirement home combined with a refugee camp. Berlin wants to rejuvenate the German population by importing millions of emigrants who bitterly resent the whites, have a different work ethic and confess religions incompatible with European values. And still, the elites do not see what might possibly go wrong!

The managing boards of central bank know that mass immigration will not prevent the Western economies from shrinking. Trump supporters are only celebrating the economic revival of the US because they do not realize that it has been achieved due to the deficit spending that has risen by 23% over the last year. We have warned repeatedly that the FED will need to lower the interest rate, and restart another QE program. The root cause of the US demise is well known: it is the dropping labor participation and the atrophy of the white Europeans whose ancestors built America. Denouncing this observation as racist will not prevent the country from collapsing. Wishful thinking has never been a remedy.

Financial markets cannot handle a declining economy, smaller profits and shrinking revenues. Banks cannot deal with a growing number of empty real estate and vacant apartments, whether in Sweden, Germany or the Netherlands. Beset with knotty problems, central banks are trying to prevent the financial markets from collapsing.  Germany will see a massive natural outflow of the working force, while in the US ethnic tensions will reach the levels known from the sixties of the previous century, the years of desegregation. Central Banks’ only tool is to lower interest rates and buy financial assets. How this will end, nobody knows.

In June we wrote that before the end of the year gold would trade at 1500 dollars an ounce. It is now trading in nearly all currencies at an all-time high. Now a total amount of 15-trillion-dollars worth of investments is yielding a negative return. Warren Buffet’s classical argument against gold – namely that it lies in the vaults doing nothing, while by investing you can make your money work for you – is no more valid. Now that investing means losing money instantly, gold’s vice has become its virtue. The precious metal may lie in the vaults, but it will neither disappear nor does it need maintenance. It could also be hidden from tax authorities.

 

One comment on “Gold trades at an all-time high in nearly all leading currencies

  • Bengt Smorgasbroad says:

    You mention bitcon and gold in close juxtaposition. But bitcon, like all other cryptocurrencies and unlike gold, is nothing but a sequence of electric charges in a digital computer memory that represents zero claim to any tangible asset.

    Bitcon is therefore in no way a store of value because there is no value to store. The argument that the total number of mineable “coins” is limited has no weight , because scarcity of an item in and of itself cannot confer value.

    The widespread and arguably fraudulent graphic representation of these digital nothings as golden metal discs with an embossed “B$” (for b******t?) appears to be the lynchpin of the con-game to draw in more suckers.

    So far bitcon has found effectively no use as a currency either, due to the extreme price volatility and technical constraints such as low transaction speeds and high transaction costs.

    Its only attraction has been a speculation in which the holders hope to sell to another party at a higher USD price.

    Further, there is significant counterparty risk due to wisespread fraud by cryptocurrency exchanges: you have no way of verifying the price of a transaction and all your “coins” can be stolen. And to register on an exchange you have to provide at least as much ID documentation as when opening abank account. So much for anonymity. Websearch “buy or sell bitcoin anonymously” and see how far you get in practical terms– good luck.

    Of course the diehards ridicule the use of exchanges and propose “offline cold” storage, for example on a USB thumb drive, to avoid exchanges altogether. They forget to mention that the thumb drive or a paper “wallet” does not hold any bitcons at all, only the private keys to them. And when attempting to transact independently of an exchange you still have the counterparties internet provider, blockchain developers and miners on whom you are dependent. What about this scenario: you plug your thumb drive on which you have stored a few $100000 of bitcon purchases into the internet and get an error message?

    You are therefore entirely correct in placing the focus on gold in this article.

    Reply

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