Category: Gold

Gold on the blockchain

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INFINIGOLD: Perth Mint Gold Token

Those of the Financial Awakening appreciate two things – the first is GOLD; the second is BLOCKCHAIN. The merging of the two was simply a matter of time. How this merging would take place was all that needed to be determined.

We thought it would have stemmed from the US. New state based precious metal depositories have been built over recent years. We assumed one of the depositories would have then established themselves on a blockchain. Allowing citizens to transact in gold and silver backed tokens, convertible for the metal held in the depository.

We have no doubt that this will still take place. However, it appears that the first institution to take their gold vault to the blockchain may be Australia’s PERTH MINT.

INFINIGOLD has released its Whitepaper 1.1. In collaboration with the Perth Mint they are taking the GoldPass digital certificate to the Ethereum blockchain, as an ERC20 standard token. The token has been aptly named the Perth Mint Gold Token – or PMGT for short.

https://www.infinigold.com/

Each PMGT token is backed by a 1 ounce GoldPass certificate, which is in turn redeemable for 1 ounce of physical gold at the Perth Mint.

Whilst stored physical gold is not allocated to each certificate, the Perth Mint claim that they have the gold available to meet any redemption request. It is also noted that the mint is guaranteed by the state Government of Western Australia – providing addition credit security.

So what do we make of this?


The PMGT is a terrific development for the cryptocurrency industry!

Tokens backed by physical assets will enhance public perception of cryptocurrency generally, as the tokens are now without doubt, a store of value. In time this should encourage more adoption of the tokens as a medium of exchange, outside of the failing fiat systems.

The PMGT could be good investment vehicle for some – just buy and hold. Though if you want to buy and hold gold – wouldn’t it be better to just buy and hold physical? Perhaps.

PMGT will be available for purchase on selected cryptocurrency exchanges for account holders who have satisfied the necessary KYC identification requirements. This in itself will limit early take-up. Once purchased however, these tokens can be moved onto the Ethereum blockchain to be transferred and traded within.

Redemption for physical gold would need to take place back at a selected exchange. This may not deter interest in the tokens though, as many would not be interested in converting anyway. Instead they may be simply looking to peg some of their cryptocurrency wealth to the price of gold – and the PMGT may be an ideal solution.

However, if the desired purpose of the token is everyday trade – forget it. A single transaction on the Ethereum network is costing as much as $US20 at present. The network is being pushed past capacity by the current exploding DeFi demand. The high transaction costs and network limitations will crush any chance of PMGT replacing fiat currency as an exchange medium.

In many ways it is a shame InifiniGold selected the slow and overworked Ethereum network to build their product on. There are so many other options now. In fact, one of our two favourite blockchains, Telos, is already capable of running thousands of transactions per second, with all transactions being feeless.

Furthermore, the Ethereum Virtual Machine (EVM) is built upon Telos, allowing token developers to continue to use their Ethereum style coding, on this profoundly more capable public ledger.

In the end…

the PMGT is certainly a step in the right direction, on the path to Good Money.

You can find more information on the PMGT here.

Have a wonderful weekend all.

GOLDSMITH


Looking for more information on GOLD, try…

The Gold Factor

And for more information on BLOCKCHAIN, try…

Blockchain: It’s just a spreadsheet.

Gold sets new record high…

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bullion gold gold bars golden

and conditions are just right for more.

For those of you who have been following this blog for some time, the headline above will be of no surprise. Yet it will be very exciting nevertheless.

Yes – it has happened. The gold spot price has broken the previous intraday high of $US1,923.70 per ounce set in August 2011.

bullion gold gold bars golden
Photo by Pixabay on Pexels.com

At this time of drafting this blog post, the gold spot price is $US1,46.92.

With unprecedented levels of money printing; geo-politics tensions; political and civil unrest; coronavirus; and social media warfare – the environment seems to be just right for a growing gold price. And this could be the case for many, many months to come.

So hold onto those gold coins.

And for the silver stackers – don’t feel left out. For the silver spot has just rocketed past $US24 an ounce – following a few days of resistance at $US23.

For the reasons outlined above – safe haven demand for these monetary precious metals is HOT, HOT, HOT, right now. Congratulations to the prepared.

Goldsmith.

For more information about the investment potential for gold see the following Goldsmith Money blog articles.

The Gold Factor
Gold destroys stocks and bonds over past 20 years!
The run on Gold and Silver has begun

The Gold Factor

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A hedge against the printing press!

We borrow the following chart from a Money Management article by Russel Chesler titled ‘The Gold Factor‘. The link to the article is here.

The article begins –

‘With the world mired in debt and economic despair, the price of gold precious metal has rallied to nine-year highs and could soon surpass its all-time high as systemic financial risk grows with every dollar spent by governments trying to stimulate economies.‘

Russel Chesler – Head of Investments at VanEck

And here at Goldsmith Money, we are seeing the world the exact same way.

Previously we have discussed Good Money and the Dollar. We concluded that dollars are not good money, because they could be printed at the will of Central Banks and Governments.

The following chart from abovenoted article is an example of this exact behaviour.

In the past 4-5 months the US Federal Reserve (FED) has printed 3 trillion dollars and flushed it into financial markets. This is $3,000,000,000,000.00!

Since 2002 the amount of currency digitally printed onto the FED balance sheet has risen from $1 trillion to $7 trillion. A 700% increase in the circulating currency supply (stemming from the FED), over a mere 18 year time frame.

Worse still – this is just one nation’s Central Bank. Consider that there are many other central banks around the world dong the exact same thing.

Worried? Well you should be!

All this new currency are new claims on the limited land, resources, products and services around the world. Effectively diluting the current claim of every person who has been saving dollars (or any other paper currency), for their own future economic benefit.

So how might one combat currency expansion of this magnitude? Might we suggest saving in assets which can’t be printed.

Gold – as the article suggests.

Starts July 1972 with initial investment of $10,000

Silver?

Land?

A business selling products or services with an inelastic demand. Primary production perhaps?

Cryptocurrency? With consideration to specific blockchains, their network security and adoption – perhaps?

Let us know what you think in the comments below.

Mass currency printing in various forms has been attempted the world over for 2-3 millenia – and the outcome has always been a disaster. Perhaps this time it will be different though. Perhaps?

However… we at Goldsmith Money, will not be taking any chances.

Goldsmith.


Gold chart thanks to Gold Hub and Silicon Cloud Technologies.



Gold destroys stocks and bonds over past 20 years!

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Why gold should be the foundation of all investment portfolios.

If an investor made a single lump sum investment of $100,000 into the US Stock Market in March 2000 – their portfolio as at 31 March 2020 would be worth approximately $250,000 (1). This result assumes dividends were reinvested and no tax was payable.

Unfortunately for the stock investor, March 2000 was shortly before the Dot-com Crash. This early crash certainly hurt the overall performance of this asset class over a 20 year period, which averaged a mere 4.76% per annum.

A savvy investor might have noted that stock prices were high in 2000 and taken on a more conservative investment strategy by investing $100,000 in US Bonds. Assuming income was reinvested, over the past 20 years they would have turned their $100,000 into $270,000 (2).

This savvy investor took on far less investment risk and achieved a greater return – which in itself is an excellent result!

Or was it?

A third investor, both savvy and Financially Awakened was even more cautious and wanted to take on almost no investment risk whatsoever. This investor therefore invested their $100,000 entirely in gold.

Their March 2020 investment is now worth approximately $580,000 (3). More than twice that of the stock and bond investment portfolios.

The gold investor has achieved an average annual return of 9.24%.

The past 2 decades has been a bonanza for those cautious investors who focused their investment portfolios on gold. So the question remains –

Why doesn’t everyone build gold into their investment portfolios?

Plus a couple of other questions…

Why don’t financial advisers and bankers recommend gold to their clients?

Why doesn’t mainstream media report on the out-performance of gold over other asset classes?

I would love to get your answers and comments.

GOLDSMITH

Charts and data thanks to GOLDHUB and the World Gold Council.
https://www.gold.org/goldhub

Metrics:
1. MSCI USA Net Total Return USD Index 1971+
2. Bloomberg Barclays US Agg Total Return Value Unhedged USD 1976+
3. LBMA Gold Price PM USD 1971+

Notes on results and disclaimers:

  • All results are hypothetical
  • Past performance is not a guarantee of future returns and data and other errors may exist.
  • The entered time period is automatically adjusted based on the available return data for the specified assets
  • CAGR = Compound Annual Growth Rate
  • Stdev = Annualised standard deviation of monthly returns
  • Sharpe and Sortino ratios are calculated and annualised from monthly excess returns over risk free rate (1-month t-bills)
  • Stock market correlation is based on the correlation of monthly returns
  • Drawdowns are calculated based on monthly returns
  • The results use total return and assume that all dividends and distributions are reinvested. Taxes and transaction fees are not included

IMPORTANT: The calculations and any other information generated by this tool are provided by Silicon Cloud Technologies, LLC based on the back-testing functionality of their Portfolio Visualizer software. Note that the resulting performance of various investment outcomes are hypothetical in nature, may not reflect actual investment results and are not guarantees of future results. World Gold Council and its affiliates and subsidiaries, provide no warranty or guarantee regarding the functionality of msgid the tool including without limitation any projections, estimates or calculations. For more information on the data used for each asset class, please visit our FAQs

* The investment horizon for the hypothetical analysis starts at the end of the month selected in the “from” date and ends at the end of the month selected in the “to” date. Quarterly, semi-annually and annually rebalancing as well as periodical adjustments, if any, happen on a calendar basis (eg, March, June, September, and December where applicable) regardless of the starting investment period. For more information, please visit our FAQ

The run on Gold and Silver has begun

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The rush for Good Money will soon be a stampede

According to those in the know – being those speaking with bullion dealers, wholesalers and the mints daily…

‘The shelves are now empty!’

Much like the toilet paper and grocery runs we are seeing at the supermarkets, demand for physical gold and silver is up 10 fold in the past 7 days.

Speaking with a dealer yesterday – they claimed they were experiencing ‘unprecedented account registrations’ as people sought to buy physical. Unfortunately for these new comers, this dealer had no stock on hand and the orders they would take – expect an 8 week delivery time-frame.  

Tuesday night the Perth Mint sent out a message to distributors – they were no longer taking orders for their 100 ounce and 10 ounce silver bars due to ‘unprecedented demand’. Yesterday their website was updated to indicate that they had no silver bullion in stock at all.

There is still gold available, however be prepared to pay $AU2,700+ per ounce plus delivery costs.

Photo by Tim Mossholder on Pexels.com

At this time the gold and silver paper spot prices continue to be the prices quoted by the media.  These paper prices are down. However, there is now a huge disconnect between the physical prices being charged. 

Customers are reporting that dealers who do have stock on hand are charging 25%+ premiums over the spot price for gold, with anything from 50-100% on silver.  As one industry observer put it – ‘the dealers aren’t even looking at the spot prices anymore.’

At present the silver spot price is $US12.50 per ounce. Single ounce Liberty Eagles however are now selling for around $20+ on ebay.

I expect that the news of this surging demand will go mainstream within a week.  At this stage the only discussion is taking place is on Twitter and in other social media sites. 

There have now been a couple of industry articles published explaining current conditions in more detail than I will here – excerpts and links follow.

FXStreet

The disconnect between paper prices for precious metals and demand in the bullion markets has never been clearer. Nervous investors are frantically buying coins, rounds, and bars. Dealer shelves quickly emptied of more popular products and delays are now being quoted on many products – especially in silver.  

https://www.fxstreet.com/analysis/bullion-demand-surges-mostly-cleaning-out-dealer-inventories-202003171653

TEX Metals

The demand experienced industry-wide over the past 5 days has been unprecedented. This is worse than Y2K, 9/11, or the Great Financial Crisis. It is the speed at which demand spiked (seemingly overnight) that has crippled the industry. Volume is up over 10x (in some cases much more) in a matter of days. This has strained customer service, logistics, and – relevant to this article – supply. The industry is built for elasticity. We are used to big spikes in demand. We can handle a 1 or 2 standard deviation move. We can’t handle a 5 standard deviation move in 5 days.

Distributors sold out of stockpiles in 48 hours. Dealer inventory disappeared immediately. Precious metals are the toilet paper rolls of the financial markets – under appreciated until there isn’t much left. 

https://www.texmetals.com/news/demand-shock-the-forces-behind-rising-premiums/

MarketWatch

Sales of the one-ounce American Silver Eagle coins were at 3.1 million so far this month, as of Wednesday, compared with total sales of 650,000 in the month of February, according to data from the Mint.

https://www.marketwatch.com/story/physical-demand-for-silver-spikes-as-price-drops-to-an-11-year-low-2020-03-19

As discussed previously, it is important to hold ‘Good Money’ – not the paper promises which are currently being printed by the trillions. Some people are waking up to this and a new trend is forming. Perhaps for most however, it is already too late.

GOLDSMITH