How to Play the Coming Gold CrisisExcellent read. Thought I'd pass it on to my fellow investors in this stock.
Growing geopolitical tensions and 'Trumpflation' have spurred a dramatic increase in safe haven demand, and the ongoing Bitcoin craze clearly proves it.
Bitcoin prices have more than doubled in the year-to-date, while those of its closest peer, Ethereum, are up an eye-popping 4,500 percent.
Yet, extreme volatility by digital currencies makes them a poor hedge against future uncertainties. Bitcoin has a downward deviation six times greater than gold's, making it extremely risky for use as currency.
Gold remains the pre-eminent and time-tested safe haven asset for hedging against macroeconomic upheavals. Companies in focus include large miners such as: Tahoe Resources Inc. (NYSE:TAHO), Goldcorp Inc. (NYSE:GG), Barrick Gold Corporation (NYSE:ABX), Agnico Eagle Mines Limited (NYSE:AEM), Franco-Nevada Corporation (NYSE:FNV)
Evidence keeps piling up: Future supply of the world's most important precious metal is now under threat. After years of falling gold prices, major miners everywhere have been forced to slash their exploration budgets, with many downsizing operations or completely shutting down.
Prior to the gold rally of 2017, gold prices had been falling since 2008 as economies around the world gradually improved in the post-financial crisis period, forcing producers to fold up operations. Even today, no new big mines are being developed across the world.
The spectacular collapse of South Africa's gold industry, formerly the world's largest, was the classic canary in a coal mine. At just 140 metric tonnes per year, the country's current production is a far cry of what it was a couple of decades ago.
The situation in South Africa foreshadowed a coming decline in global production.
Last year marked the first time that global gold output declined since 2008, with all major producers except China recording significant declines.
The fact that we are now past 'peak gold' is a criminally underreported phenomenon, and the situation is expected to worsen as the years roll on.
The sad fact of the matter is that we live on a small, finite planet, and it's just a matter of time before the gold market has to climb a major wall of worry in the form of small and dwindling supply.