์๋ฌธ ๋ณด๊ธฐ
If there is a crisis in the financial system, system systematic crisis, how do I protect some of my reserves? And you say to yourself, in the case of such a crisis, what I want to have is some physical commodity that can be easily stored and say hidden. So you buy gold and silver and platinum. As you may know, or as my regular readers at least know, I've been positive about gold for the last 40 years or so since the mid80s when it was uh depressed.
And at the end of 1998 1999 I specifically wrote about the bull market in commodities which is also uh part of the subject of my book tomorrow's gold Asia's age of discovery that the demand in Asia specifically in China for raw materials and for precious metals would go up a lot and that there was central banks would eventually buy gold as an alternative to the US dollar.
And so it doesn't surprise me. Uh what I think has happened is that obviously the price has gone up in the recent uh times as over the last one year we up something like 40%. But uh what strikes me is that there is not a euphoria in gold or silver or platinum because the young people prefer to speculate in cryptocurrencies rather than in gold.
Gold was for them not sexy enough, not volatile enough. So they all gambled on cryptos. And in the last few months, cryptos have been weak. Number two, what strikes me is that uh as the price of gold went up, people took a lot of profits because it hadn't moved for a long time. So they uh they sold gold.
And I have to explain here a factor that is important. When in poor countries, say I live in Thailand, when the economy is poor, uh people get into debt problems because they borrow money for emergencies and so forth and suddenly they can't repay. So they have to sell something. Are they going to sell the car and the motorcycle with which they have to bring the children to school every day with which they have to go to work every day?
No. That they will keep also for face reasons towards their neighbors who would see that they suddenly have no car. Would they sell their house? No, they have to live somewhere. But gold is something they can easily sell. So there's a lot of selling pressure uh by people who are in emergencies who essentially have to repay credit or lower their credits outstanding.
And so there has been a constant selling pressure in the gold market. There isn't that hasn't been any panic buying at all. Now the central banks are in a different position because compared to say 50 years ago the central banks have very little gold reserves compared to monetary reserves and so they are accumulating and they don't pay so much attention to the price then to the fact that they say the board of directors of the bank of Thailand or the board of directors of the bank of China, they decide we're going to have 30% of our reserves in gold.
And so they buy, keep on buying until they have the 30%. Now, I'm not saying that every central bank will have 30% of their reserves in gold. But some will and some will because of the wisdom of the American State Department that freezes the assets of foreigners that have assets at the Fed in the United States.
You understand that? So when you have money and reserves, you're worried that someone will suddenly freeze your assets. And so these countries like China and India and Russia and Cuba and so forth, they will keep more reserves in gold than everything in dollars. This is the reason gold is sort of moving up or creeping up.
Now, I'm not saying that there won't be a correction in gold, but there has been a steady flow of money out of the gold market or from people who say gold is overbought and too high and so worse. It is relatively high compared to say the price of wheat or soybeans and so forth, but it's not that high compared to all the monetary assets.
They go and ask your friends, go to the pub and ask your friends, have you heard about gold? And they say most people will say, yes, gold is going up. And then they will say, well, I have some gold. Or the wife will say, usually the wife say, we have some gold. Then you ask specifically, well, how much gold do you have?
And then they will tell you, well, a few coins, but who has 20% or 30% or 40% of his assets in gold, silver, and platinum? Hardly anyone. We have some gold. When the wives of people say that, they mean they have a gold watch or they have a few coins. But very few people if they have say $20 million would have say $6 million or $10 million in gold.
Very few. Or take a billionaire. He has a $1,000 million or $100 million. How much gold does he have? Maybe 1 million in gold. Nothing. The portfolio managers 70% have less than 1% in gold. I'm just saying, you know, we don't know what the value of gold is precisely. But all I can say if I look at the investment community and I have a lot of clients and I know a lot of people and so was most of them have no gold.
Most of them have no gold nothing. I'm I'm not sure it will drive the price exponentially higher, but I can assure you that 95% of fund managers, especially because the fund managers nowadays are mostly young people. Nothing against young people. They have also their qualities and they may have performed well.
But I'm saying especially young people would have practically no blob exposure practically no because they were all in specs in meme stocks and uh lately in the magnificent seven stocks and so forth in Nvidia and Tesla they don't own companies like Newmont mining and barric and of course well this is the first bull market in gold where actually the physical has outperformed say gold stocks now lately it's improved say gold is up this year by about 10% or so year to day and the gold stocks have rallied a bit more the G digs the gold mining ETF.
But by and large, gold stocks in past uh bull markets have rallied significantly more than the metal. This hasn't happened yet. And I don't have the full explanation, but I can see why this is the case. Let's say if I have money and I have lots of money say 100 million or a billion what is my concern?
My concern would be the financial system will it stay alive? I mean we all know the way it is now with all the deficits in the world with all the debt accumulation is not going to survive forever. something some sort of a crisis will occur and then if you're wealthy if you have a 100 million or a billion you say so so if there is a crisis in the financial system systematic crisis how do I protect some of my reserves and you say to yourself in the case of such a crisis is what I want to have is some physical commodity that can be easily stored and say hidden.
So you buy gold and silver and platinum and you buy it in physical form because the physical yes they can take it away from you but it's a question of how easy is it for a government to take everything away from you if they don't know where you keep it and that you have it. I mean, you just can't go at cocktail parties and say, "Oh, I buried it in my garden of three tons of gold because if a tax officer is there at party, he will react to it." But this is the way essentially some wealthy people think.
They they are very wealthy on paper but it's paper and they are worried about the paper the system and if the system breaks what do you want how do you want to protect some of your wealths you can protect it in your house but the house is visible to government officials they can tax it away from you property taxes and uh and then you But they they can make it difficult to own anything.
But I'd say wealthy people, they probably have 5 to 10% of the money in uh physical gold eventually. They don't have it yet, but when they really think about it, they will have
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