Monetary Metals Gold Outlook 2020

This is our annual, for-subscribers-only, analysis of the gold and silver markets. We look at the market players, dynamics, fallacies, drivers, and finally give our predictions for the prices of the metals over the coming year. Introduction Predicting the likely path of the prices of the metals in the near term is easy. Just look [...]

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7 replies
  1. Scisco says:

    “Can you say that the steel is getting shorter, as the candy compresses?”

    I believe there is an inverse relationship between the two. As the candy compresses the steel would appear longer.
    Otherwise a great article.

  2. turlock says:

    Nice measured conversation. I am a recovering gold addict. When events happen like Cyprus or Switzerland, how can anyone have confidence in the status quo? Or worse, how does one make any sense of negative interest rates? I am 70 and not able to modify a lifelong understanding about thrift, savings, legitimate capital formation, the virtue of deferred consumption, etc. Am I deluded?

    • Athlone says:

      Definitely not deluded.
      I suffer the same complaint at 69 years old.
      After reading Keith’s articles for nearly 10 years, along with Antal Fekete and Alasdair Macleod, I’m almost stable.

  3. MarcoPolo says:

    Another excellent article.
    If I look at my net wealth I’d offer 90% of it is gold. Sounds stupid I know.
    I’ve spent my life in the insurance industry and still do. The industry is principled on the concept of acceptance risk for price that can be approximated to secure sufficient capital to pay expected losses and produce a product.
    Holding gold is simply a fact that there is no other form of insurance that will protect me when those who run many large commercial organizations, government, nor anywhere in the financial industry (banks and their ilk including the insurance industry itself) begin to experience the downside of the sine curve many call the business cycle. All institutions can take action to prolong the “peak” of the curve, but history shows that all life and activity seems to follow a sine curve.
    I like to think that my gold as a %age of my net wealth is nothing more than a historically proven insurance product that protects me and family, when across the planet we begin the downside ride on the sine curve. As pointed out, all the actions today are doing nothing but steepening the slope of that downside.
    And no, I don’t keep it in a bank, at home, or in the back garden in coffee pots. MM has also given me a way to use a portion of it to generate a return on it…a return measured in gold, not “currency.”

  4. Gregory says:

    1000 barrels of oil converts to roughly 2lbs of gold at today’s prices. It would fit a cargo pants pocket, but most suit pants are not tailored for that loading, especially if one is “on the run” (with @MarcoPolo’s historically-proven insurance product). I don’t want to mock this idea, though. Monetary Metals LLC seems more like a Duluth Trading™ cargo pants pocket than it does the threadbare pockets of a banker’s suit. Perhaps it could be regarded as an insurance product. Still, that is not the company’s real goal for this corner of the gold market, which is to nurture the organic seed of income-in-gold in hopes it will once again spread into the ground-cover it once was.

    As I’ve quoted before, 100 years ago, the early Austrian economist Benj. Anderson asked whether the subjective value of the money function alone could be separated from the objective value of the gold stocks, as the subjective theory of all value predicted it might. We now know that it can be separated, but only at a rather steep cost in eroding stored values. I think it is time to ask a follow-up question: Isn’t the nexus of objective and subjective value which is necessary to support a healthy money function just economic certainty about future facts? I believe Antal Fekete wrote just once on the subject of “entropy”. I found it persuasive enough to pursue as a means to synthesize the two points of view about the role of commodity base money in a credit-based economy. In @MarcoPolo’s “insurance” and @turlock’s “addiction” I sense a hunger for certainty about future valuations that today is only being satisfied by miners of new gold, but potentially might be quenched by miners of other forms of certainty (possibly including mathematical certainty, but not in the present crypto-formats which relate only to mining energy costs). Low information theoretic entropy also develops as Fekete briefly mentioned in the due diligence process of bill-mongering. There is a worthwhile mine in which toil yields improved certainty. Gold bonds and bills as credit/clearinghouse monies seem to be the right road to take toward free-market monetary sanity.

    Greg Jaxon

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