Beware of the Central Bankers’ Malice – Trust Only Gold
Beware of the Central Bankers’ Malice – Trust Only Gold from Commodity Trade Mantra
Gold – a Reality Hedge on Economic Fears
There are two issues I’ve been receiving a steadily increasing stream of queries on: Gold and Ethereum.
Because of the huge volatility in Ethereum’s cryptocurrency, ether, since I last discussed it a few months ago, and the fact that I’ve not written about gold since January, this is a good time to address both again.
The first issue to address is that my positive outlook for both over the long term has not changed at all.
My preferred method of speculating on gold appreciation continues to be via the VanEck Vectors Gold Miners ETF (GDX) — and I am still expecting at least an average annual return over a 10-year hold of 25%, which is about a 1,000% nominal increase.
The roughly 30% decline in GDX over the past year presents an excellent long-term entry point to take a position or add to existing positions.
The same is true of ether.
When I last addressed ether a few months ago, it was at $80, after having started the year at $8. During the past few months, it spiked to about $400 and has since pulled back to about $200.
There is still not an exchange-traded vehicle allowing for direct investment in ether, and discussing how to do so is not appropriate for this venue.
As with GDX though, the current price is still a very reasonable long-term entry point. There are numerous commercial applications of Ethereum being advanced now, and as they are announced and actualized, the public’s awareness of Ethereum and ether will increase.
That will almost certainly cause investor interest in both to increase faster than ether can be mined.
Ethereum-based block chain applications are still in their infancy, have not yet begun their S-curve adoption and expansion, and as such an investment in ether should now be considered a generational or permanent speculation.
If there is more subscriber interest in the subject, I will expound on the mechanics of buying and holding ether in future columns.
One last point on the subject before moving on, though. Ether is the only cryptocurrency I advocate holding or participating in. The others, including Bitcoin, should be avoided, in my opinion.
The reason I chose to address both gold and ether in this column is that one of the drivers of interest in both is the increasing concern about the state of economies globally and the monetary and fiscal policies being pursued.
As I wrote about last week, the totality of data collection and interpretation in the U.S. has been incrementally morphing toward data creation, narrative making, and ultimately policy decisions based on both.
This isn’t just a U.S. issue, though. The ECB is pushing an economic narrative of following the U.S. policy of withdrawing monetary stimulus next year. Even in Japan, there is renewed discussion of an increase in consumption and economic activity that will allow their policy makers to begin to withdraw stimulus within the next few years.
This appears globally to be a conscious decision by policy makers to attempt to affect consumer sentiment and increase consumer spending as a result. An analogy is a tow truck helping to pull out a stuck vehicle when its powertrain is incapable of doing so on its own.