Entering text into the input field will update the search result below

Gold As The Axis Of Investment

May 28, 2020 1:32 PM ETGLD, GOAU, UUP, TLT, SPY13 Comments
Paul Wong profile picture
Paul Wong


  • Gold will keep us alive and our dreams intact by preserving the purchasing power.
  • Gold is the best torchlight to illuminate the path ahead through the gathering dark clouds.
  • Gold shows the decline of the financial system since September 2018; the slide is accelerating.


Regarding gold as the axis of investment simply means to measure other financial assets against gold in order to gauge the health of the assets within the global Fiat system.

Even though the central banks have some success in reflating the financial markets since late March, tough challenges remain because of depressed economies and future earnings. The root problems are record total debts and high asset prices. The efforts of the central banks to keep asset prices at the peaks result in an unprecedented amount of money printing. It is conceivable that asset prices can be kept at high levels longer, but eventually at the expense of the debasement of currencies. Gold being the outsider, a physical asset that is not faith and credit based, has always been the best and may be the only independent qualifier to compare with currencies, bonds and stocks. This article tries to provide visual tools based on gold for monitoring other major financial assets. Honest description of asset values is the intent.

Stocks and bonds have enjoyed favorable conditions for the past 12 years to reach peak prices. The virtuous part of the credit cycle, which started with quantitative easing and more credit available as shown in the diagram above. Derivatives also helped in boosting demands so that some assets prices became excessive.

The US repo mess in September 2019 was a reminder that both dollar liquidity and asset prices were in danger zones. Despite the Fed's effort to suppress the volatility by ending quantitative tightening earlier than planned and start quantitative easing, these moves were not enough to prevent stock prices from falling in February 2020. As fear surfaced, migration to safer assets began the vicious part of the credit cycle. This course appears to be ongoing in the foreseeable future despite the recent bounce in stocks.

This article was written by

Paul Wong profile picture
As a geo-scientist with 35 year as a professional and executive in oil and gas companies to create value on projects through evaluation and valuation analysis. Currently I am doing stock market research, on topics such as gold and the dollar.

Analyst’s Disclosure: I am/we are long GLD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (13)

Stay out of gold unless you are willing to spend years tracking and analyzing the REAL situation. It's a market where sharks prey on the fear and ignorance of those either too stupid or too lazy to stay informed and rational. It is well known that gold is a market that can be moved in the short term by red-flag wavers. And all those fearful, ignorant people, who also think that they are smarter than just about everyone else, jump in and drive the price up. The red-flag wavers chuckle and head off to the bank.
BlueTower5000 profile picture
You just described every single asset class.
Darn... you're right!
TBLS profile picture
these ETF’s hold the physical metals and allow you to convert your shares to deliverable metals.
Paul Wong profile picture
Cannot agree with more than you stated. The only reason I use GLD is because its size, and definitely not for security purpose since the ETF manager is one of the largest bullion banks, doubtful if they ever have 100% physical gold for the ETF. Another Lehman moment is quite possible for the next 2 years, investor need to be aware of this occurrence.
Investor since ‘73 profile picture
The only asset class that makes sense right now is PM miners, streamers and physical gold. There may still be individual stocks outside that class worth owing but not many. These are the times that those of us who have always owned gold have long feared. An absolute moron running the nation with an iron fist, an empty head and a jet black heart not even bothering to print the money, it’s all digital now. The adults all left the room long ago, only bootlicking servants are tolerated and unless you’re a member of his crime family, even they are not tolerated for long. Just make up a few Trillion $ and put the numbers on a screen.
Paul Wong profile picture
The main reason about this article is to reveal what you voiced, in a mathematical way that exposes the imbalances today of no Fed independence anymore. This is a once a century event that we have to deal with or protecting ourselves; that is why I mentioned refugees, which are increasing by the day globally. I turned off the TV 5 years ago and regained my mind with peace, I write for progress and prosperity for all.
Huh? I don't want no stinkin gold. Oh, I buy it monthly. NVM
NO. Just....NO
Do you have any useful criticism of the article? I enjoy the opposing viewpoints in the comments as much as the articles themselves (often more) so if you've got a well thought out critique, please share it. "NO. Just....NO" adds nothing to the conversation.
BlueTower5000 profile picture
Pan American Silver up 10% today to new 52 week highs says you’re wrong.
I enjoyed the article. I have thought long and hard about the future role of gold in this changing world. Some points that particularly trouble me are

- Physical and paper gold price distortions
- The advantage of Fiat as a pricing mechanism
- The governments ability to seize or otherwise restrict Gold
- The industries that rely on reasonable gold prices in fiat (jewelry)

But these points being mentioned it is undeniable that gold is fiat moneys only competitor. And both parties of a duopoly find success.
Paul Wong profile picture
All the concerns are valid. The system in place has been suppressing gold price as much as it can through trading platforms and changing laws. Gold is globally price. If we free ourselves with a global investment mindset and to store some of our savings in international physical gold ETF, the move can alleviate the concerns.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

Related Stocks

SymbolLast Price% Chg
SPDR® Gold Shares ETF
U.S. Global GO GOLD and Precious Metal Miners ETF
Invesco DB US Dollar Index Bullish Fund ETF
iShares 20+ Year Treasury Bond ETF
SPDR® S&P 500 ETF Trust

Related Analysis

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.