Gold's 'just not acting that well' as Wells Fargo Strategist Turns To Bitcoin

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Gold's dull period and low demand has Wells Fargo's Head of Real Asset Strategy, John LaForge brooding over


Source: pixabay

Earlier an article on Kitco News, John LaForge, head of Real Asset Strategy at Wells Fargo, questions whether Gold remains as a hedge for stocks:

“Stocks, in the last few weeks have hit, and you see the days when stocks really get hit, and what does gold do? Gold is up $3, it’s up $5, it’s up $7. I think where we are in this gold super cycle, this long cycle with commodity prices, is we’re kind of in the dull period,” LaForge commented.
Source: Kitco

Traditionally, Gold 'hedges' against market volatility and many experts in the field of Gold assets believe that gold prices counter interest rates. However this may not seem to be the case in the recent financial crisis events.

A report show that there is poor or weak correlation (cor=0.28) between gold prices and interest rates from the 1970s to present. In the more recent events, gold prices shot up in the 2000s, while interest rates declined. However when gold prices continue to rise during the 2008 financial crisis, the federal funds rate continued to grow.

It would probably take a decade before gold prices drastically changes due to its supply and demand from the actual discovery of gold mines. In terms of market demand, Bitcoin and cryptocurrencies have definitely pique the interests of the community rather than investors alone.

-tysler

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Regards, dear friend, @tysler.

I did not understand your approach well.
You tell us that the price of gold has always remained on the rise although the interest rates applied have always been low. That is, can we consider gold as a market stabilizer?
If so, then we could argue that gold prices also influence the volatility or stability of the crypto market.

Please excuse me if I'm speculating.

Although I find this topic very interesting, especially because there have been STO's releases that are backed by gold.

Thanks for sharing.

All best, Piotr.

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we could argue that gold prices also influence the volatility or stability of the crypto market

Indeed. Financial analysts compared Bitcoin to Gold a few months ago. They called attention to it being more stable over 6 months. This is when BTC was between 4 and 5k

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Gold prices has been believed to drop when interest rates go up.

However when gold prices continue to rise during the 2008 financial crisis, the federal funds rate continued to grow.

This shows us that gold may no longer be a hedge for the market. Gold as an asset class, is also affected by its actual demand by manufacturers in electrical components.

Any stock backed by gold in my opinion is quite risky. We do not know the actual supply of gold in this world, whether they were kept in hiding, not found underground or simply too much scattered across. Who really controls the gold prices?

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Gold as an asset class, is also affected by its actual demand by manufacturers in electrical components.

Would you mind telling me what do you mean @tysler?

Yours
Piotr

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Dear @tysler

I didn't hear from you in a very long time. I really hope you're fine and just got bored with Steemit.

If you would ever decide to come back and would post anything, then please send me link via memo and I will gladly check it out.

Take care of yourself,
Piotr

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The spot price of gold is derivatives-based and does not reflect the true price of physical gold.

Knock knock @tysler

I wonder how are you buddy. Didn't hear from you in a while. I can only hope that you're well.

Have a great weekend,
Piotr

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