I was so pleased yesterday by the announcement that I have joined
the Research team at GoldCore as it meant that I could finally start talking
about it and was back in a role that lets me indulge in my passion by
researching and geeking out on all things gold, silver and money.
Source: Wikimedia Commons
As some of you may know, in a previous life I wrote a lot about gold and
silver. I took the perspective of someone who was new and curious to the
precious metals. I wanted to know more than just how the Fed announcements
affected the prices, why demand and supply weren’t enough to predict
movements and why history didn’t seem to have taught us any lessons.
After 3 years I stepped away as, to be honest, I was bored. Not of gold
and silver but of the narrative, it didn’t seem to be changing and keeping
up-to-date with what was happening in other areas of investment and changes
in the financial arena.
I spent the next two years broadening my knowledge base, working with
startups in the trendy world of fintech and speaking to people about that
buzzword ‘blockchain’.
I continued to speak at events about gold but it was refreshing (hopefully
for the listeners as well) to provide a perspective that was looking past the
push for the gold standard, the (potential) confiscation of gold and theories
surrounding COMEX delivery.
Instead I was able to speak about how fintech and other applications of
technology were educating both investors and banks about how money could best
be managed to the advantage of the consumer, how blockchain
is widening the scope for gold as money and how a push for a cashless society
is good for gold.
After a couple of years away from writing I return to the space with the
same level of curiosity about precious metals but with a wider perspective
and perhaps one focused on other areas. It is this that I hope to bring to
the GoldCore research pages.
Below I outline some of the areas that I look forward to covering over the
coming weeks and months (and maybe years if all goes well!).
Bail-ins and confiscation
Bail-ins
is something that I think the British public (and EU citizens everywhere)
have stuck their head in the sand about. Know this, they are very real and
no-one’s money in a bank is without risk above a certain level.
When changes were made in January 2016 to the UK’s bail-in conditions and
protected deposit amount it certainly was not well publicised, and few people
realise that just by spreading your money across multiple banks may not mean
you are any less at risk.
Bail-ins are the fiat equivalent of gold confiscation that has many gold
fans worried.
We’ll be covering this in more detail in the coming fortnight, but the
summary of it all is that diversification is key. And I don’t only mean
diversifying your bank accounts, ISAs etc. I mean diversify your portfolio
and include allocated
and segregated gold and silver, assets that cannot be lifted thanks to EU
regulations.
From a fintech perspective, the threat of bail-ins adds an extra level of
interest as their appearance ties-in with the push for cashless society and
negative interest rates.
Cashless society and those negative rates
With negative interest rates now making the front pages it is no longer
valid for gold naysayers to claim that a non-yielding asset such as gold and
silver is a waste of time. So as it’s not particularly attractive to hold
your wealth in cash anymore, how do banks incentivise you to do so? They
decide that cashless payments are the future, i.e. the only way you can spend
is directly from your account and not from the cash in your purse.
Bail-ins are one of the latest (and increasingly important) reasons why
you need to be incentivised to keep your cash in the bank. As long as we have
the ability to withdraw our cash from the bank to avoid being penalised in
this negative interest rate environment then banks are limited in what they
can do. However once your cash is in there, then it is ripe for a bail-in
opportunity.
Going cashless is a big mission by banks, payment providers and
governments. It is believed to be wholly beneficial, not only for time-poor,
permanently connected Westerners but also for the poor and those in the
third-world who are perhaps without the physical banking structure that we
are all so familiar with.
For both parties I completely see the advantages. Already I feel a
transaction is taking too long if I have to pay by chip and pin rather than
contactless or Apple Pay. For Big Issue sellers in Sweden I like that I can
pay by card and so the old ‘sorry mate, I haven’t any change’ is no longer an
acceptable reason. And for refugees and those in the third world whose live
may well exist online but have difficulty to prove their identity in a
physical manner (passport, drivers licence, address) then I can see a huge
benefit. They can be online, paying for items by phone and don’t have to
worry about establishing themselves in the city or country in which they find
themselves.
My issue is, however, with a completely cashless society. To me this
echoes the same steps as telling you what is legal tender. i.e. why can’t I
spend my gold in Starbucks? I’m not a big believer in scare-mongering, I
don’t think that there is a ‘war’ on cash, but there is certainly a growing
mentality in the city that the rise of payment apps is incredibly convenient
whereas cash is big and bulky, insecure and the medium of choice for
criminals.
This works to the advantage of cash-strapped banks, who may one day face a
bail-in.
Again, I plan to look at the war on cash in far more detail, however it
will come to the simple conclusion (yet again) of diversifying your
portfolio. Why, if there is a risk that something may disappear/get damaged
etc., would you not take out insurance? You would.. And so to protect
yourself from the steps that are being made for a cashless society, where
your every transaction will be recorded, and at risk of regulatory decision,
I would suggest that you buy the most tangible and trusted, border less asset
there is – gold.
Cyber
Fraud At SWIFT – $81 Million Stolen From Central Bank REUTERS/Dado
Ruvic/File Photo
How the same tech will help gold and silver
This makes me want to take a step back and make it clear that I believe there
is a happy medium between the tech that is facilitating the cashless society
and the gold market.
One of the huge benefits to come from the financial crisis (and yes, there
were some) was the explosion of ‘fintech’. People who knew the financial industry
well saw an opportunity to take advantage of the regulatory push to protect
and educate consumers. They build apps, lending platforms, crowd-funding
sites and more to reach the consumer directly rather than making everyone use
banks for everything.
This in turn got the consumer to think about how they invest their money
and how they don’t need to always use a bank. The most successful technology
in all this is the blockchain.
Blockchain is the name of the technology that underlies bitcoin. Whilst
bitcoin has been a phenomenal success (given its decentralised existence and
lack of marketing focus) the blockchain is the true star, with the
cryptocurrency merely the poster child.
The potential for the currently fragmented gold market when it comes to
the blockchain
is huge. And for those who one day hope to use their gold as money (and I
mean in a very real and practical sense) then there is no longer a technical
reason why this cannot happen.
This is something for more explanation, in the blogs to come. It might
seem like I believe technology is the only way gold and silver will continue
to do well, it isn’t.
But what I do see is that we are at a significant turning point where this
is very little reason for gold not to become an accepted medium of exchange
in the West, as well as a standard way to diversify your portfolio.
In turn, this can only be good for the gold and silver market and indeed
their prices.
Gold and Silver Bullion – News and Commentary
Gold
steady on weaker dollar, on track for 2nd straight weekly gain (Reuters)
Gold
slips as ECB refrains from extending stimulus (Reuters)
Fed
Urges U.S. Ban on Wall Street Buying Stakes in Companies (Bloomberg)
U.S.
Consumer Credit Jumps More Than Expected In July (Nasdaq)
EU
to Provide Debit Cards, Cash to Refugees in Turkey as Part of Migration Deal
(WSJ)
Swiss
National Bank’s $1Billion Gold and Silver Mining Share Portfolio (Youtube)
Exclusive:
‘Flash Boys’ protagonists aiming new exchange at gold (Reuters)
Exciting
Step Forward – Helicopter Drop Of Debit Cards For Refugees In Turkey
(ZeroHedge)
Brexit
Blows £15 BLN Hole In Public Finances – Watchdog (Telegraph)
The
Gold Apple Watch is dead (QZ)
Gold Prices (LBMA AM)
09 Sep: USD 1,335.65, GBP 1,004.68 & EUR 1,184.86 per ounce
08 Sep: USD 1,348.00, GBP 1,009.11 & EUR 1,195.81 per ounce
07 Sep: USD 1,348.75, GBP 1,008.60 & EUR 1,199.85 per ounce
06 Sep: USD 1,330.05, GBP 1,997.94 & EUR 1,191.46 per ounce
05 Sep: USD 1,328.30, GBP 1,996.23 & EUR 1,189.49 per ounce
02 Sep: USD 1,311.50, GBP 1,987.95 & EUR 1,172.74 per ounce
01 Sep: USD 1,305.70, GBP 1,985.80 & EUR 1,172.13 per ounce
Silver Prices (LBMA)
09 Sep: USD 19.41, GBP 14.58 & EUR 17.23 per ounce
08 Sep: USD 19.93, GBP 14.90 & EUR 17.65 per ounce
07 Sep: USD 19.92, GBP 14.89 & EUR 17.71 per ounce
06 Sep: USD 19.60, GBP 14.70 & EUR 17.55 per ounce
05 Sep: USD 19.46, GBP 14.60 & EUR 17.43 per ounce
02 Sep: USD 18.75, GBP 14.15 & EUR 16.76 per ounce
01 Sep: USD 18.65, GBP 14.08 & EUR 16.73 per ounce
Recent Market Updates
– Jan
Skoyles Appointed Research Executive At GoldCore
– Silver
Bullion Surges 3.5% To Over $20/oz
– Ireland
“Especially Exposed” To “International Shocks” Warns Central Bank
– Deutsche
Bank Tries To Explain Failure To Deliver Physical Gold
– Physical
Gold Delivery Failure By German Banks
– Avoid
Paper Gold – “Gold Delivery” Refused By Gold Exchange Traded Commodity
– Debt
Bubble in Ireland and Globally Sees Wealthy Diversify Into Gold
– “Why
Case Against Gold Is Wrong” – James Rickards
– Obama
To Leave $20 Trillion Debt Crisis For Clinton Or Trump
– Gold
Bullion Averages Biggest Seasonal Gains in September Over Past 20 Years
– Gold
Futures See Massive $1.5 Billion “Non Profit” Liquidation In “One Minute”
– Jim
Grant Is “Very Bullish On Gold”
– Germans
Warned To ‘Stockpile’ Cash In Case Of ‘War’
