It's never too late

We all know that lightning never strikes twice, right? Except that's a myth - the Empire State Building is hit about 25 times a year. A similar misleading myth exists around gold. The price has gone so high so fast - it went up by some 26% last year and reached around $2,790/ounce - that some people assume they have missed the boat. Now the Dollar price is almost $3,000/ounce the boat must have sailed, right?

While one cannot rely on the past as a guide to future events, the history of the gold price over the last 26 years provides an interesting and encouraging perspective. In May 1999 the UK's then Chancellor of the Exchequer, Gordon Brown, announced the sale of a portion of Britain's gold reserves. Between July 1999 and March 2002 the Bank of England (BoE) held 17 auctions and sold 395 tonnes of gold at an average price of some $275/ounce - a tenth of the price today. For many media pundits and investors Brown did the right thing; gold was simply a relic of the past. The central banks of Argentina, Australia, Austria, Canada and the Netherlands had all slashed their gold reserves. The Swiss National Bank (SNB) shocked the gold market by announcing the sale of 1,300 tonnes of gold, half its holdings. The gold price fell to its lowest in three decades of almost $253/ounce in August 1999.

Then the place to be was in dotcom stocks. Many dotcom stocks never turned a penny but such was the fever around them that investors were seduced by hopes for the future. The future turned out to be a massive bubble which burst in 2000. By 2002 the Nasdaq index, on which many of these stocks were listed and which rose five-fold between 1995 and 2000, had dropped by almost 80%. Some think that history is now repeating itself with the massive valuations of some AI stocks.

Full steam ahead

Today's world is very different from that of 1999. Wars, doubts about future economic growth, the rise of the BRICS, the steady decline of the Dollar in countries national reserves, the resurgence of inflation, the massive expansion of the US national debt, of all national debts - all have destroyed the settled certainty that bathed the final years of the last century in a rosy tint. And central banks which sold their gold reserves at rock-bottom prices are now once more net buyers of gold, as they are rediscovering its value as a defensive asset.

But lightning can't strike twice - last year's 26% rise cannot possibly be on the cards for 2025 too? Surely this is one boat that's sailed? None of us has a crystal ball. But we do have the example of the past. Gold was a dead duck in 2000. Twenty-five years on, it's an asset no financial adviser would be without.

There are also alarming straws in the wind. One such is how central bankers are taking a more relaxed view about controlling inflation. Christine Lagarde, president of the European Central Bank (ECB), this week implied that her bank has given up trying to maintain inflation at 2%/year. "The direction of shocks is much harder to predict" she said. It's as though she rang through to the good ship Gold's engine room 'full steam ahead'.

Galvanizing markets

A new US President has shaken up the world with his plans for peace in Ukraine, his reminder to Europe that it needs to plan its own defense, and his blow-torching of federal government waste. His radicalism may stretch to America's gold reserves of 8,133 tonnes, or about 261 million ounces. Currently that gold is valued by the federal government at $42.22/ounce, giving a book value of $11 billion. Revaluing it at the current market price of about $2,950/ounce would produce a valuation of some $750 billion. That's still a drop in the ocean compared to the US national debt of $36 trillion. Nevertheless it would be a windfall for the US Treasury, which owns the gold, and could be used to fund a sovereign wealth fund. And any such revaluation would probably push gold prices higher.

Far from missing the boat, the call is out for more passengers. Buy a ticket with Glint!

At Glint, we make every effort to demonstrate a balanced conversation between gold, silver, crypto and fiat currencies when it comes to purchasing power and, while we strongly believe that gold is the fairest and most reliable currency on the planet, we need to point out that it isn’t 100% risk free. While we have seen a steady increase over time, the value of gold can fall, which means that its purchasing power can also decline.

For US

Graphic representations of value are for illustrative purposes only. The Glint debt card is issued by Sutton Bank, member FDIC. The sale, purchase and storage of precious metals are offered by Glint and not Sutton Bank. Your investment in precious metals through Glint is

·        Not insured by the FDIC.

·        Not a deposit or other obligation of, or guaranteed by, Sutton Bank.

·        Subject to investment risks, including the possible risk of loss of the principal amount invested.

All investments involve risk, including possible loss of principal. The value of precious metals is affected by many economic factors, including but not limited to the current market price, demand, perceived scarcity, and quality of the precious metal. Precious metals can increase or decrease in value. Past performance is not a guarantee of future results. As such, investing in precious metals may not be suitable for everyone.