Wednesday, October 10, 2018

Main focus on this year's In Gold We Trust annual report is that global de-dollarization is real

For 12 years running Incrementum has published an annual In Gold We Trust report which spells out not only economic and financial trends taking place across the globe, but also why individuals need to have gold in their portfolios to sustain their wealth during these periods of change.  And in their newly published report on Oct. 9, Incrementum put a large focus on global de-dollarization and how it will affect the dollar and dollar based activities.

Some of the key takeaways of our new chartbook are: 
A turn of the tide in monetary policy: 10 year liquidty party is ending due to QT and rising interest rates. 
A turn of the tide in the global monetary architecture: De-Dollarization is real. Trade and currency wars might be the consequence 
A turn of tide in technological process: cryptocurrencies and gold are friends, not foes
Gold's status quo: Heavily skewed risk/reward-profile after capitulation selling. CoT report offers best setup in 17 years. USD 1,180 is a crucial support level. - Incrementum
Following the dissemination of this report, Forbes weighed in with their analysis of the publication and echoed the sentiment that despite the depressed price of gold, it is once again needed by investors in their portfolio as turmoil begins to grow in both currencies and markets.
1. The End of Easy Money 
To offset the effects of the global financial crisis a decade ago, central banks increased liquidity by slashing interest rates and buying trillions of dollars’ worth of government securities. Now, however, it looks as though banks are ready to start tightening, and no one is really quite sure what the consequences will be. 
2. Banks on a Gold-Buying Spree 
While I’m on this subject, central banks have been net purchasers of gold since 2010, with China, Russia, Turkey and India responsible for much of the activity. Just this week, I shared with you the news that Poland added as much as nine metric tons to its reserves this past summer. If gold is such a “barbarous relic,” why are they doing this? As Incrementum writes, “The increase in gold reserves should be seen as strong evidence of growing distrust in the dominance of the U.S. dollar and the global monetary system associated with it.”  
3. Too Much Debt 
Everywhere you look, debt is rising to historic highs, whether it’s emerging market debt, student loan debt or U.S. government debt. Meanwhile, higher rates are making it more expensive to service all this debt. 
4. An Exceptional Store of Value 
In U.S. dollar-denominated terms, the price of gold is down right now. But in Turkey, Venezuela,Argentina and other countries whose currencies have weakened substantially in recent months, the precious metal is soaring. This alone should be reason enough to have part of your wealth stored in gold. 
5. A Sterling Time to Buy Gold? 
Finally, a word about timing. According to Incrementum, some of the best gold buying opportunities have been when the gold/silver ratio crossed above 80—that is, when it took 80 or more ounces of silver to buy one ounce of gold. - Forbes
Just as both weather and solar activity revolves in cycles, so too does gold function in a similar pattern.  And while stock and bond markets exploded over the past seven years due to unprecedented participation by the central banks through their policies of low interest rates and vast money printing, we are now entering in a 'maunder minimum' cycle of Quantitative Tightening, and this means that like in 2010-11, gold is set for its time to prosper and at a price value rarely seen in relation to dollar confidence.


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