An interesting article I found on Bloomberg regarding gold, arbitrage, and gold contracts. Where does this take gold for the common investor. Does this mean the pandemic and resultant transport difficulties placed on hold on commercial passenger flights (this is true) have driven bankers to other mechanisms as a hedge? Is there going to be a glut of gold flooding the markets soon, driving down prices? I can't fathom where and what the effect in the cause will be. But I prefer personally miner stocks as a producer of this fine metal. But then again,... “If a bank is short, it’s hard to close the arbitrage,” Holmes said. “Therefore, instead of increasing their position as the arbitrage grew wider, they’ve had to either hold constant their position or even reduce it.” Bloomberg
Gold values are impacted by supply and demand. Look at gold charts. Supposedly, gold values increase with bad economy and war. Buying gold is almost like a reflex. Stocks are down, economic uncertainty, or there's a war; gold feels safe. Market is good, I don't want to hold gold; I want to put my money in the market and buy. My personal instinct is that whenever gold is high like right now, I don't want to buy gold. It will go down. I don't want to be the guy holding gold Kruggerands in my safe, 10 years from now. When it's worth less. I want to be the guy with the Kruggerands right now, who bought them back when the price was half of today, and my money doubled. I don't like buying certificates. I want the real gold in my hand. Just personal. If war breaks out, that gold is in my hand and it goes with me. I don't want shares of Smith and Wesson. I want a Model 19 loaded.
Imagine your gold in coins and bars. If you had to pick up and run, it's the only way to take your wealth. If a war breaks out, can you barter by opening your RobinHood app and showing Tesla shares? Preparing for the worst, is why people horde gold, and buy guns. A gun is an asset. It can provide self defense. Hunts animals large enough to feed your family more than 1 meal. Get all the gold you want when you have a gun. Adds leverage in barter and negotiations. Fight a war or several wars, if you live through the 1st. Settle disagreement in your favor. Acquires what people do not want to give up. And you can still sell it for fair market value when you are done with using it.
Gold is on the high side of the charts. Can it go up? Sure. Supply and demand. People want more vs available supply. Mines produce new gold. Some say mines cut back on production when prices are high, to drive pricing higher and make more per unit. Existing gold circulates back into the market as some people will choose to sell high because they bought low. looking at historical price charts, there will be opportunity in my lifetime to buy gold at lower rates. If I don't buy high, I don't miss out. Or I miss out on the drop.
