Gold, Inflation and copying China

Discussion in 'Gold' started by JulieW, Jan 16, 2020.

  1. JulieW

    JulieW Well-Known Member Silver Stacker

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    Interesting piece. Read at the link for charts and rationale. It makes sense. Note reference to the UN food price index (bushfires in Oz, freezing crops in US etc):

    China’s Gold Hoarding: Will It Cause the Price of Gold to Rise?
    There are reasons to think that the gold price will rise faster than expected.

    https://www.voimagold.com/insight/chinas-gold-hoarding-will-it-cause-the-price-of-gold-to-rise

    Ole Hansen, head of commodity strategy at Saxo Bank, noted on January 9, 2020, “The story for gold is still there…. the United Nations food agency reported Thursday that its global food price index rose to a five-year high in December to 181.7 points. We expect the inflation story to unfold throughout the year.” Just because we haven’t seen staggering inflation numbers in developed nations for forty years, doesn’t mean it’s not on the table.

    Like I said before, I think in the current environment, the gold price can rise faster than expected. Aside from the speed with which the gold price can rise—in a debt-based monetary system, the gold price is guaranteed to rise in the long run—equally important is that inflation will create winners and losers. If your savings are in fiat money and you own debt, you will lose. If you own hard assets, such as gold, and you are in debt, you will win. Perhaps this is why Sun Zhaoxue wrote, “The world economy faces new changes, new challenges and new opportunities. Therefore, we must relook the status and function of gold from a strategic height, and create and implement a national gold strategy.” Having 22,346 tonnes of gold within Chinese borders will protect against currency depreciation.

    Ms. Lagarde confirmed she aims for currency depreciation when last November, she said, “We should be happier to have a job than to have our [fiat] savings protected.” Fortunately, there is gold in Europe too.​
     
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  2. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    In real terms though it hasn't changed much for the past 60 years and there doesn't appear to be a link between the FFPI and price of gold when both are adjusted for inflation.

    Screen Shot 2020-01-17 at 9.02.01 am.png

    http://www.fao.org/worldfoodsituation/foodpricesindex/en/

    Screen Shot 2020-01-17 at 9.09.27 am.png

    https://goldprice.org/inflation-adjusted-gold-price.html
     
  3. Jim4silver

    Jim4silver Well-Known Member

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  4. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    Pretty much the same case in India but in India the higher taxes might play some part. There was also a report that China curbed gold imports earlier in the year - https://www.bangkokpost.com/business/1731079/china-puts-a-curb-on-gold-imports

    The curbs were partially lifted by August - https://www.cnbc.com/2019/08/22/reu...es-restrictions-on-gold-imports--sources.html

    The most important point in the article is “* Gold production down 5.2% at 380.2 T as resources deplete (Adds comments from analyst, China GDP data)”.

    One of the reason I bought gold is because China, which is the largest producer of gold at the moment, is depleting mine resources at an astonishing rate. Australia is the 2nd largest producer, and mine supply is increasing based on the news I found.

    [​IMG]

    https://www.ceicdata.com/en/indicator/china/gold-production
     

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