🔴Gold in Today’s Monetary System (w/ George Milling-Stanley)

🔴Gold in Today’s Monetary System (w/ George Milling-Stanley)


Since all of the dislocations in financial markets in 2008-9 and the gold market dislocations of 2011 to 12 We have seen a resurgence in economic growth in the emerging markets I know that we got an occasional quarter when there’s a downturn But the general trend over the past five six years or so has been for China to grow at five six or seven percent We’d give our eye teeth to do that So would Europe so would Japan? which is helping to support gold jewellery demand again throughout the emerging world not as strong as it was from 2001 to 2010 but nevertheless pretty solid growth every year and even when we get an economic downturn Golgo demand has been holding very very steady in China in India throughout the emerging world so that’s good support, but increasingly we’re seeing investors emerge in the emerging markets We’re seeing a significant increase in pure investment demand Alongside the jewelry demand and that I think is a relatively new term in the equation That is also I think going to be a catalyst for higher prices going forward when we look at the rest of the world We look at Europe North America We’ve got two very distinct kinds of investment demand going on there safe-haven buying People are concerned Macroeconomic ly people are concerned here politically. I don’t think we need to go into all the details of that there is a level of uncertainty that that some people would suggest is actually unprecedented in markets right now So safe-haven buying of gold makes a lot of sense for people who are concerned about about the potential for a stock market decline The potential for political tensions to to increase trade wars, whatever There’s a lot of a lot of problems on the horizon and outside of this country You’ve got the whole issue of brexit and Germany coming to terms with the transition from mrs. Merkel to whatever comes after mrs Merkel which is which is proving a little difficult for them to absorb So you’ve got the solid safe-haven buying which I think is providing good support to gold prices but in addition again, this is in the period after all of the dislocations of 2008 and 2012 passed away the dust settled from we’ve seen significant strategic asset allocation type buying from both institutions and individuals Putting somewhere between 2 and 10 percent into their properly balanced global multi acid, portfolios Because they know it improves their Sharpe ratio. It increases their risk adjusted returns all of that together you’ve got Flat to declining supply you’ve got modest but nevertheless important growth on the demand side that’s a pretty good recipe and given that the exhaustion is variables also to my mind seemed to be pretty favorable in terms of macro economic tensions geopolitical tensions You’re asking me what keeps me awake at night as far as gold is concerned and I have to answer that gold is what allows? Me to sleep at night it allows me to push further out on the risk spectrum and my equities into more growth stocks and To be a little more aggressive in terms of higher yield on the bond side Because I know that that my portfolio has a pretty solid core that is going to perform and is going to perform Even better if and when all those other things turn down, but it’s going to perform whether they turn down or not So gold is what allows me to sleep at night I think something would have to go wrong with most of the factors that I think lie behind the rising What I expect to be their continued rise in gold prices so I’m gonna have to go wrong with more than just one of these you’d have to see a Significant surge in the value of the dollar and I’m not expecting that anytime soon I think the Europeans will get their act together. I’m not going to give you a timeframe on that That would be foolish but I think they will get their act together and the Euro will Reimagine currency and as some competition for the dollar I think increasingly the renminbi from China is emerging as it’s it’s it’s it’s it’s competing in the sense that The IMF has allowed the renminbi into the Special Drawing rights and that’s kind of a Seal of approval if you like from the IMF for central banks around the world if they choose To include the renminbi in their official reserves, which has not really happened very much But I think is increasingly going to be happened. So I think we’re moving away from a period of where the dollar was king And them nothing else really counted in international monetary system To a period where we’re going to have Multiple reserve assets just as we did when we had sterling and the dollar and gold all three Coexisting when the euro was first launched the euro Then took its its its turn and played into a multi asset international monetary system if you like more recently dollar dominance as we emerged, but as I said I think that we we are already seeing the renminbi starting to move governments are issuing Bonds denominated in whren the UK government did that not that long ago? I mean to me with my accent That’s obviously the ultimate seal of approval So you’re gonna see more of that kind of thing happening. You’re gonna see the renminbi paying more of a role You will eventually see the euro play more of a role and I think the gold will also play more of a role because it is a Tradition that when you have a proper multi-asset system Then gold does play more of a role in the international monetary system and in the system of foreign exchange reserves in banks gold Is viewed as a currency one other thing? I didn’t mention in terms of Supply and demand was that it’s not just the private sector in the emerging markets that a big buyers of gold Emerging markets central banks have been net buyers now for a decade of the equivalent of about ten percent of each year’s demand Which is very significant and last year They upped their purchases to the largest since that magic date of 1971 the birth of the free market in gold they bought more gold than at any time since 1971 last year accounting for about 15 percent of final demand and those purchases are continuing this year So I think we’ve got very very solid support as far as the as far as that’s concerned You You

11 Comments

  1. You picked a lousy day to tout gold with money going into bonds gold is not looking good at the moment. Wait till after the Fed meeting the 30th and 31st. And if you wanna throw in Brexit why not throw in tariffs, the Gulf, and the price of tea in China while at it etc … beside …. wait a minute “gold let’s you sleep at night”?You’re another insecure person, a gold bug, not good.
    What should worry you about gold is the bond market. Especially if you’re into gold futures.
    Why not get a gold grill then you’ll only have to open your mouth to tout gold. Oh I forgot that’s what you are doing. Good luck gold buggy…

  2. In terms of your EURO prediction, you will be proven wrong. The currency will fail within the next 4 years.

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