The two biggest problems for markets - Russia and inflation - both lead back to gold. Even if both issues are eventually "resolved".
I disagree with the long-term bullish case for gold for a couple of reasons:
1. Real rates are deeply negative, inflation is rampant and we have the largest war in Europe going on since WW2. Yet, gold has gone nowhere in ten years. That's the market telling you that gold just is not a very good hedge against inflation and/or conflict over the long term. Maybe it was in the past, but I find it hard to ignore the last ten years.
2. If Russia sells their gold for dollars (what else would they sell it for?) then this will increase the supply and depress the price.
3. The idea that Russia and China are challenging the dollar is not holding up, in my opinion. Russia isn't challenging anything, they're just looking for a way out of a very bad economic situation. They're even still paying their coupons in dollars, depleting their reserves. That means they are desperate not to lose access to credit markets years down the road. And there's no sign the Chinese even want the Yuan to be a reserve currency.
That's not to say that there might not be a short-term bull case for gold. But I like how you've purchased calls, so you probably have an expiration for your idea in mind 🙂
Nobody cares about gold. When the US slapped millions of normal every-day Russian people with sanctions -- destroying their livilihoods and ability to earn money and all that they had saved and invested -- prompting many to leave the country. What is the ONLY method in which they could flee the country with all of their wealth intact?
Bitcoin in a hardware wallet.
When Russia invaded Ukraine and people need to flee across the border, and their bank, credit cards, and money didn't work. What is the ONLY way they were able to flee across any international border with all of their wealth intact and easily access it ?
Nobody can carry gold across any international border. Nobody can exchange gold in any currency with anybody in the entire world 24/7 with the push of a button with no permissions needed and no third parties required.
I do not understand why you and others keep beating this gold drum. Gold is fucking USELESS.
You can buy it and task somebody else with storing it (maybe they'll even give it back to you if you ask nicely) or you can buy it and store it yourself -- but you'll NEVER be able to take it anywhere so you better fucking hope they don't shut down the gold shops and say you can't transact in it for example.
Meanwhile -- look at Nigeria. The second biggest users of Bitcoin in the world outside of the United States.
Yet it's "illegal." They also have the only working, 100% rolled-out CBDC...nobody uses it.
I just got back from Nigeria and EVERYBODY uses Bitcoin -- making it illegal did nothing. Nobody even uses the CBDC (people laugh about it when you ask them saying they forgot it was even released).
They say "Getting Bitcoin is easier than getting dollars and running an online business and transacting internationally is easier with Bitcoin than anything else. "
I'm telling you man you're missing the mark -- nobody gives a shit about gold. Nobody can use it effectively. It does nothing.
The 50year suppression of gold by the Comex and western bankers is about to end. Paper and derivative controls are waning and facing overwhelming challenges. Continuously stealing central bank reserves sounds the death knell of dollar-based reserves. When Russia sets a high price for gold in energy the game will be over.
The way these clowns are effing everything up world wide, I dont buy gold as a short term investment. It is long term, likely to be an inheritance for sombody else... i buy it in case the manure hits the rotating oscillator..... if i need to cash it in, things basically suck. Good to get large and small denominations so you can make change 😎.... storage food and ammo too.. also have 16.8 kW solar on the roof and two tesla batteries... woods out back and a chain saw for my stove... mini split heat pumps and oil baseboard heat (two oil tanks)... river nearby and waterfilters... ev next year... see you all in hell boys! Si vis pacem, para bellum
I think Russia would love to have a currency backed by commodities. The U.S. could match any currency backed by commodities. This would not by any means eliminate the Dollar but it would give alternatives. This should slowdown Dollar printing and possibly put a speed limit on currency devaluation. Sometimes the craziest things happen at the strangest times. My question is why wouldn’t you buy GDX?
Did you read this? Skip to the Q&A.
7 ways to Sunday is my new and all-time favorite disclosure.
I hope you’re right but I’m not as sanguine about the process. I think we may see quite a long period of choppy price action with no strong directional bias as competing narratives fight it out
Chris, all this change will take time. Your thesis will play out, but for heaven’s sake we are only a month into the war.
The Gold chart is exhibiting a pretty remarkable fractal cup and handle pattern. There's a decade-long mega cup from 2011 to 2020, and the 1.5-year handle of that mega-cup is itself a mini-me version of the decade-long mega-cup and handle pattern. This recent Q1-2022 gold spike and pullback have completed the mini-me cup and handle formation. They say to buy when a chart is smiling at you. This one is smiling twice. I will also note that the linear-scale Gold chart resembles the log-scale BTC chart, whatever that means. Muh dick says "bullish".
The recent gold selloff might have something to do with option expiry.
I don't understand why Russia would (ever) sell gold for US$ especially now and going forward. Their model has been for years to get out of US$ and fill the vault with gold, just like so many other central banks around the world.
The G7 breached their contract with their sanctions (payment cannot be made and those funds cannot be used by Russia) when they continued to accept product for the last month. There is no reason to not pay in Rubles or gold, the G7 is just saying no we won't - they might soon find out what it means when Russia decides to no longer deliver.
Bernanke said they vault gold because of "tradition" - this is the biggest "tell" ever.