Surely all assets have their own merits and there's a place for hedging risk and diversifying?In other words, have assets that are capable of producing a return while you own them. Even with negative ECB interest rates, I can earn 0.01% from my cash. With gold I get nothing until I sell it.
History continually repeats itself in that department. People in countries that have known relative stability are complacent - although I have no earthly idea why - as the Greece/Cyprus scenario and Euro crisis isn't that long ago.0.01% is your reward for handing control of your money to a bank who can lend as they please. Banks have failed, as us Irish should well know. Last time depositors were lucky enough to get bailed out at the expense of other taxpayers, but the ECB have said any similar future crisis will involve "bail-ins", as happened in Cyprus.
That's very true - albeit people should note it's also an issue with 'paper gold'. The ratio of paper gold to physical gold is believed to be in the region of 200-250:1. It's quite difficult to get your hands on physical gold and there are difficulties around moving it and storing it. Some studies put the paper silver to physical silver ratio at in excess of 500:1. Can anyone really be sure that physical reserves are there to meet paper silver/gold? A couple of weeks ago, it emerged from Wuhan, China that 83 tonnes of fake gold were being used as collateral.Equities and bonds again involve giving your money to somebody with no guarantee of getting it back.
The temptation at any given time for governments/CBs to tamper is too great. I've been trying to follow this whole modern monetary theory/rampant money printing deal in these virus days. There has been very little commentary from CB circles about the dangers. However, the Governor of Australia's Reserve Bank came out the day and stated exactly that.Gold and silver are comparable with a 50 euro note, which yields no return. The problem with the 50 euro note is the ECB can produce billions more at the touch of a button, which they have been doing throughout the COVID situation.
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