Loading ...Back in early 1998, maybe late ’97, so before Robina, a few guys were gathered at our place studying graphs of US debt that we’d downloaded from a 56kb dial-up connection. Hillary was in the White House and the debt was rocketing, over $4tn and going hyperbolic. There’s no way it couldn’t not reach $6tn by the end of her term and we’re telling each other how totally unsustainable it all was, collapse was imminent, the EOTW was nigh, SIX TRILLION DOLLARS!!! Must buy gold. And I did, a bit, also partly as Y2K insurance (how many of you are now feeling old, 56k, Clintons, Y2K, US debt only petty cash ….).
LOL.
Then 2001, 2008, 2020. Crisis after crisis. Liquifaction after liquifaction. We bought a house in 1998 for $195k. It’s a better house, bigger block than the one next door that’s just sold for over $1.2m. And yet, when we bought the house, gold was AUD440. The house has increased by c. 520%, and gold by 740%. Even if it was an investment property, gold has outperformed after rental income, property taxes, insurance, repairs and renovations, income tax, capital gains tax, horrible tenants etc. are taken into account.
So gold has done alright, especially in the last five years (in AUD), even as people continued to knock it. In addition to all the old canards that we yarned about in the early noughties: Fort Knox emptied, rehypothecation of leased gold, US$100,000 per ounce if all dollars were backed by gold, spike cornering the silver market etc; we now have China as a big buyer, other central banks building up their reserves, some serious conflict in the world with either Ukraine or Israel as triggers for WWIII, debt now 900% higher than 1998 (funny you picked 900%!); so really not much has changed. The potential for gold is still there, but you have to ask yourself, in a crash – who will buy? Not the mum and dad investors; I think we’re looking to the CBs to propel it “to da moon”.
Can they kick it down the road again? Will be having the same conversation in 2035? 1998, 2001, 2008, 2020, 2024, 2030 and now 2035? I dunno, spike, nobody knows, we knew nothing twenty years ago and I think we know less now.
But for the moment, as goldilocks always said, “give me volatility or give me death”!! Not that I’m trading anything other than popcorn futures.