Here’s why gold is king of commodities: Investment Watch


From Birch Gold Group

This week, Your News to Know summarizes the latest top news related to gold and the economy in general. Stories include: Gold as the most effective commodity, optimistic analysts despite outflows of gold funds, and 239 rare gold coins discovered on the walls of a century-old French mansion.

Gold is the king of the commodity sector

in a recent analysis, the World Gold Council reiterated the opinion of many experts who believe that we are entering a raw materials supercycle. Between higher inflation and the shortage of basic materials expected for the foreseeable future, it is not a difficult notion to consider. And among the various commodities that could become more important in the investment sphere, gold is once again emerging as a safe bet for the top spot.

The analysis goes one step further by stating that gold has what it takes to completely replace the allocation of a portfolio to commodities due to the myriad of benefits it brings. Last year was just one example of gold’s ability to outperform any commodity, with only silver getting ahead. However, although silver had a volatile year, the peak performance of gold was combined with the lower volatility of some commodity. Volatility matters for two very different and important reasons.


First, lower volatility alleviates the psychological impact of the swings we see up and down in the daily value of our savings. Fewer large moves makes it easier for savers to stick to their financial plans even in times of market turmoil. Loss aversion – we tend to suffer more pain from losses than joy from equivalent gains – can lead people to make terrified decisions that can sabotage painstaking financial planning.

Second, lower volatility reduces the likelihood of having to sell assets at a time when prices are low. In general, less volatility in any portfolio, especially a long-term investment like a retirement savings plan, is a good thing.

Gold shows exceptional resilience in various economic situations. These can range from liquidations in the stock market to systemic crises to which other commodities are vulnerable. And while it is well known that gold is a shield against inflationBeing able to perform well during periods of low inflation is further testament to its overall strength.

And while gold is robust, it is also exceptionally liquid, especially when compared to other commodities. Many would say that the liquidity of gold is close to that of cash, while other commodities can be difficult to buy, store, manage and sell.

With all of this in mind, gold might as well be the only merchandise whose role as a store of value, and therefore its role in a portfolio, simply cannot be questioned under any economic circumstances.

Paper gold drag; $ 2,000 by year-end for gold is still viable

In your monthly gold paper fund report released Tuesday, Neils Christensen from Kitco reviewed institutional trends in gold ownership and assessed the impacts on the price of gold in the coming months. While US funds sold 32.2 tons of gold paper in August, European institutions bought 9.6 tons.


This discrepancy is likely due to portfolio managers’ attitudes towards perceived economic conditions in their regions. Spikes in US dollar and Treasury yields triggered the sale of paper gold, as is often the case, with the need for liquidity being another important factor.

At the same time, Europe is experiencing the largest increase in inflation in almost a decade. Also, central banks in various regions warn that economic recovery could be significantly delayed. This is quite a different aspect of America’s expectations that the economy will recover quickly.

Much of the headwinds for gold have to do with the expected shrinking balance sheets of central banks, especially the Federal Reserve. However, the recent consensus is that the Federal Reserve will not make any significant progress in this area over the next two years.

Overall, the report was bullish on the outlook for gold, as the metal continues to trade between a range of $ 1,790 to $ 1,830. Some of the main drivers that could set the way for gold to hit $ 2,000 before the end of the year include weakness in stocks in emerging markets and the growing specter of inflation.

Renovators discover 239 gold coins dating from 16th and 17th century France

In the middle of a routine renewal At a century-old mansion in Brittany, France, in October 2019, three workers stumbled upon a remarkable find. The workers were hired by the current owner of the mansion, who was on vacation during that time.

Workers discovered a treasure trove of rare gold coins, pictured, on the walls of a historic French mansion in 2019

Workers discovered a treasure trove of rare gold coins, shown here, on the walls of a historic French mansion in 2019. Now, the coins are going up for auction. (Ivoire Auction House photo via Smithsonian Magazine)

When the renovations began, the trio soon found a metal box hidden within one of the mansion’s walls. Three days later, the renovators found another hiding place wrapped in cloth and hidden under a piece of wood. Together, the two caches contained a total of 239 rare gold coins dating from 16th and 17th century France.

The coins were sent to archaeologists and determined to have been minted during the reign of contemporary monarchs, Louis XIII and Louis XIV. Archaeologists assume that the coins were made as part of Louis XIV’s series of monetary reforms that were carried out to finance wars during his reign.

The value of the entire stash is estimated to be between $ 295,000 and $ 355,000. Among the most notable coins is a double minted Louis d’Or in 1646. Only 120 of these remain, and the value of the coin is around $ 17,000.

So who benefits from this windfall? Well, in 2016, France introduced legislation that mandates that all finds of historical value must be turned over to the state.

NeverthelessSince the owners bought the mansion in 2012, they have the right to auction the coins. According to French law, the proceeds from the sale will be divided between the searchers and the owners in what is sure to be a happy ending for everyone involved.






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