I believe Gold is best characterized as a stagflation hedge. Not an inflation hedge. When there is inflation but good economic growth, you should own stocks instead. If there is low inflation and low growth, you may want to be in bonds. Only during stagflation does gold hold value significantly better than other assets. I believe the time has come for Gold to shine once more, seeing as we are arguably entering a period of stagflation.

I think gold and silver are both good, because you can pile it up on the bed and roll in it.

In 1921 for the price of an ounce of gold, you could buy a real nice suit. In 2021 for the price of an ounce of gold, you can buy a real nice suit.

This is very very helpful thank you very much🙏

Thank you for explaining it so clearly!

You made a lot of points in this video that made sense individually but were tough to piece together for a single conclusion, the end table really helped this video make its points understandable. Great video as always

Just one of my observations. NS&I has not sold any new inflation linked products since 2012 (although it allows existing bond holders to renew). This may be a hint to the inflation outlook. Always watch out for actions from those in charge rather than their words ("nothing to worry about inflation, keep calm and carry on").

Many thanks!

I like this vid.. Good insight.

Excellent. Very clear.

as long as paper gold keep being manipulated, gold have no value

5-10% for me is like a savings account that will be there as long as I need it to.

tnx, very useful sir

Gold and I am talking in hand and physical, rather than a hedge against inflation its a hedge against a doomsday situation. As it extreme as it sounds, if there were to be another crisis such as COVID or even further, a world war, gold would become incredibly valuable. The reality is, a crisis of such a degree is unlikely but the direction we are heading in where scarcity of resources is becoming more evident. An asset like gold may be worth while having in a varied portfolio. And as time goes by, gold in its finite supply and being something you can truly hold rather than paper share and block chain currency may become more attractive than it ever has been in the past.

Ramin - what is your opinion on inflation now in terms of whether it's transitory or not? It wasn't many months ago you were leaning towards it being a short burst, have you changed your mind?

Great analysis as usual.

I find it's better to think of gold as catastrophe insurance instead of just a price hedge, for the major disasters as opposed to just a bear market. You CAN get income from gold however, and I wanted to hedge my hedge, so most of my gold holding is HGY, an ETF that holds GLD shares and writes calls on about 1/3rd. The call-aways mean you get a somewhat dampened exposure to the gold spot price both up and down, roughly half to two thirds, but in exchange you get a pretty reliable 6-7 point monthly income stream from call option premiums. For my long term buy and hold income strategy, it works pretty well.

very interesting

Excellent video

I think there is something strange going on in the gold market at the moment as I have heard that countries such as Japan, China, Russia and India have been increasing their gold reserves quite heavily, and yet gold is low to what it should be? Would gold miners such as Polymetal be a better hedge than just gold as they pay a dividend aswell as having gold assets? Saying that the miners are also very cheap???

A point that needs to be made is that for much of the 20th century gold was linked to the dollar and therefore its price was effectively capped. Secondly it was unlawful for Americans to buy or hold physical gold up until the 1970's.

What about collectible Pre-33 Gold? People always forget to mention that type of gold even though it has gone up multiples from where it was late 90's and mid 2000's

Good perspective & vid. Following your train of thought investors can buy gold stocks. Many pay good dividends like NEM 4%, KL 1.7% (but more than double that in return to shareholders when you factor in share buy backs),.... and even more importantly have excellent fundamentals like low Price to FCF, strong balance sheets,... As mention by others here gold is a store of value, a form of insurance, a counter agent to fiat currencies like USD,... Aside from the stock market, gold is complimentary in one's portfolio. It's slightly negatively correlated. Bonds in a 60 / 40 use to serve as that hedge to stocks. Now with US 10 year at ~1.5% and even lower in Europe, Japan,... it doesn't serve as effective counter to stock market declines.

Is it really fair to throw stocks in there as a comparison when the economy/returns can be skewed due to actions from the fed? I know my tech heavy mutual fund skyrocketed from March 2020 to Nov. 2021 thanks to extremely low fed interest rates due to the pandemic shutdown.

Would you comment on GLD vs Gold Miners (GDX) vs Junior Gold Miners (GDXJ)?

Thanks again Ramin, might be interesting to look at a commodity etf/fund v's equities, as we know the S&P has the advantage of constantly evolving over time, Buffet does a piece on this looking at the top 10 in the fund over a number of years, also we have to consider why central banks still hold gold,

So what he is really saying is that gold is currently at a discount. Perfect time to buy mining stocks.

"Short cheese sandwiches" - you gave me such a genuine belly laugh Ramin haha.

If many categories of investments are asking too high of a price, some diversification of capital reserves into different currencies, especially for countries you may soon be doing business with or traveling to can help diversify some risk. Diversifying some into gold for when most investments are over priced may be a good idea if most investments are unreasonably priced. If expecting a significant recession it could be a good idea to diversify like this some, in my opinion.

It really depends on why you’re buying it, if you’re buying it as hard money, yes, if you’re buying it to “grow your wealth” against inflation, no.

if gold is a good hedge against inflation for assets whats a good hedge against inflation for cash flow. Gold miners or inelastic goods?

How can you look at that correlation chart and conclude that the correlation is not near 0? Seems random to me. And near 0 is better than negative... so not following your math there. 😒

Don't see the point of Treasuries and Gilts If you have to buy in at very low yields, i.e. now, one gets virtually no income and the value of the bonds is only going south as yields go up.

As you said Ramin, the point is the nature of fear. Gold is the only asset that looks able to survive a complete collapse of the economic system. That doesn't apply to cryptos which depend on energy supply and stable power and internet grid. Gold is still seen as the ultimate refuge. It's not useful for system failures like inflation but it is for all the new threads we are seeing nowadays.

Looking forward to the launch of the "Pensioncraft Cheese Sandwich and Cake" ETF.

No doubt gold itself doesn't provide an earnings, as such I bought shares of 2 gold mining companies, canadian n south african that pay probably a combined dividend of 6%. I m very curious how that would work out in a stagflation, inflation or recession scenario.

I believe investing in a wide as possible uncorrelated basket of investments or savings is the way to go. That does include an element of gold. Gold investment is in ETF's, direct in minors or gold royalty. Saving in physical gold is about peace of mind and taking money off the table and statistically/historically transferring that buying power out into the future long term. I don't know why investors or gold bugs get so worked about which method is correct, both are, as are all other forms of investment. I view the physical gold as replacing traditional savings in a near zero interest rate high real inflation environment. Good luck to everybody👍😷

Great video as usual, Ramin! What about buying Gold Miners ETF which has income (dividend) and also as hedge for inflation?

How can I hold gold in my portfolio? Is there a fund? Edit: I found this ETF: GLD. Is this what you’d buy if you were to invest in gold?

When you buy treasuries, you feed the debt monster. Unlike holding physical gold.

We take for granted that we have not seen dramatic upheaval in our time...my grandparents did, my parents did, and I expect at some point I will. Gold is for that day.... I have happily put ~10% into physical bullion over the years, and I sleep well with it...and hope to hand it intact to my heirs.....for when that day comes.

Brilliant, as usual.

Gold is a good hedge but poor investment. Land is both

Personally - gold as an investment is pretty poor but as a savings vehicle while banks pay 0% interest does beg the question . It does have one think at the very least

I'm 3 minutes into it and haven't heard about money printing.

If you ask any goldbug who owns physical gold, they don't own it for an inflation hedge per se. If one looks at inflation for what it really is, which is a declining level of trust in the currency, gold really is a political hedge. It's a hedge against money printing; not in that the printing will cause inflation, but in that those central banks that go down the path of money printing of fiat currencies, historically the only way out for the government is default or hyperinflation. When the currencies that have been printed lose enough value, or trust erodes to the point of no return, gold is one of the few options the gov will have to re-peg the currency, as still is a hard asset. A question all should think about is this: if the only tool the central banks have to control inflation is to raise interest rates, what happens when the interest rates rise to the point at which it causes the underlying government to default? If the only way to prevent that default is to keep interest rates low, and continue printing money, then how can inflation really be controlled at all? Goldbugs aren't talking about hedging against a few percentage points of inflation for a year or two. They're talking about the likely scenario in which interest rates cannot be allowed to rise and inflation has to run at 20 percent for several years just to allow the government to remain solvent.

An ounce of gold in 1920 would buy a nice suit and so would £20…An ounce of gold now still buys a nice suit but £20 wouldn’t buy the buttons.

Remember the gold price is affectively being surpresed by the paper (ETF) gold markets. Basel 3 should correct this at end of year.

Could there be a portfolio with both SP500 and Gold which produces a better risk-return ratio?? Due to covariance.

Are investors currently worried about war? China looks on the verge of annexing Taiwan. Gold would be a more logical hedge than treasuries in that scenario?

Unfortunately very few people understand gold for them. If you had invested the same amount of money into Gold and S&P500 in 1999. Gold would have totally outperformed the S&P500. Silver would have outperformed everything. I keep staking retired at 59 living the dream.

Can I ask what software do you use to plot the graph of the price of gold or even drawdown of gold... How do you get this data?

I bought a fair bit of gold and silver the past few months, also shares in gold miners (that pay a dividend). At no point do I plan on selling any of it. Hopefully I'm dust and my kids or grandkids benefits.

Excellent analysis and so clearly explained - thank you

If you look at rolling 2 year gold prices it strips out a lot of noise that occurs over short periods such as 12 months and it works really well as a countercyclicl hedge to equities .

How do I buy bonds? Are there ETFs holding bonds?

I still check in on this channel to see how long it takes to figure out Bitcoin. Tick tock next block.

What about fear of war...

Can we look at the history of gold price and apply that to the future of Crypto currencies? I am no expert so this might be a stupid question but isn’t gold and crypto currencies the same thing?

I enjoy and love gold jewelry therefore I buy as much of it as possible whenever I can afford it... I have been buying gold jewelry since the 1970's... I just sold some of my gold pieces for more the 4 times the price I originally paid, especially the older heavy gold jewelry... I'll keep this up as long as I can afford too...

I-bonds provide a double inflation return and make an excellent hedge against inflation.

Instead of guessing what will happen next I'd consider how gold might work in a long term all-weather portfolio. Would a small amount work alongside bonds? What about a dash of VIX?

Personally, I use M2 per capita growth as a measure to determine of gold is fairly valued as there is a very clear positive correlation between M2 per capita and the gold price. But other than that, why would you have to choose between bonds and gold as a hedge? Long(er) term the correlation between stocks and gold is about 0 and between bonds and gold also is about 0. Imho it is best to mix the three. As stocks and bonds longer term tend to be negatively correlated and gold isn't correlated to both of them, then you have the best mix: sometimes bonds work better as a hedge and sometimes gold does. Long term, portfolios including 5-20% gold next to stocks AND bonds tend to be the most stable portfolios. Personally, I'm a big fan of the Golden Butterfly Portfolio.

What about repeated allegations of U.S. banks manipulating the gold price? Doesn't this throw a spanner in the works?

I think the purpose of having some portfolio allocated to gold is for critical events, such as China invading Taiwan, US financial system collapse (due to not extending debt ceiling) etc. So it is these extremally rare events where owning gold may be useful. of course if China invading Taiwan turns into WW3 , then even gold won't help if we all dead or living on nuclear wasteland. But it is useful safe haven otherwise for really Critical Level events (example WW2 where gold was able to buy contraband/food in occupied Poland when money was useless or during 1920s/30s hyperinflation in Germany, gold was king etc.).

I wonder how much crypto investing (as a hedge) is competing for gold dollars?

Gold is a lousy hedge, due to market manipulation, but it's great insurance if you can afford it.

Gold has historically (US data since 1971) improved minimum rolling returns so it could be useful for retirees. Cap-weighted stocks & bonds could simultaneously struggle for a decade.

That's not correct when you says investing in gold does not have income. Etf instruments do have dividends.

Cheese and bread are not a good hedge against inflation because they go off; gold can be kept for decades as a store of value.

Please could you do a video on spread betting as an investment strategy and whether it’s worth it as a way to avoid U.K. capital gains taxes?

Gold for long term

Blessed are the cheesemakers. NB, This is not meant to be taken literally. It refers to any manufacturers of dairy products. :)

I wonder why gold still seems quite cheap

I'm investing in a cheese sandwich right now, it's goes well with a bag of crisp.

Probably shouldn't have watched this video because I had no idea what half of those words meant lol

You can't conclude that an asset with more volatility adds volatility to your portfolio. That's not inherently true.

energy has done well too

Amazing content! The comparison of gold and treasuries during the two time periods was a revelation. You are amazing at explaining and visualizing the content for better understanding. Go Ramin! I like every video you make.

You didn't mention STIPS. How would they react up or down?

The problem I have with gold is that it's really not that useful

25% of Kevin O'Leary's portfolio is in gold.

Great video. By the way, I think barely anyone can predict the financial future. Timing the market is pretty much impossible. I think most people should have 100% allocation to sound stock ETF’s. Except for people who for various reasons need a hedge/security against volatility. Only rarely is gold a viable alternative. These times might be such an exception though, as your fair value model shows. One thing is certain though: Cash is trash long term (Ray Dalio). And in other words, saving (via bank accounts) is for losers (Robert Kioysaki). The world is unfair. The stuff on this channel should be taught in elementary school. But only a few of us are lucky to learn from wise parents or stumble across stuff like this. On a side note I am happy I moved from my native Denmark to Norway and that I raise my children here. Denmark is a good country, but Norway is better in my opinion. Not least because of the wise and democratic public investment fund currently worth 1.2 trillion dollars = more than 200,000 per capita. A great security for coming generations.

Dear Ramin, a great video. I have ‘liked’ all your videos. If bonds were mentioned here, in relation to inflation, viewers would reasonably expect a mention of index linked treasuries and index linked gilts as a comparitive hedge. Viewers might wonder what the PensionCraft view is, on how index liked bonds perform as an inflation hedge; especially if interest rates rise.

oil is the real gold

Failure to mention the current financial situation regarding money printing by the Fed, record levels of debt to gdp and the fact that owning physical gold has no counter party risk, for me renders this video utterly useless.We are in unprecedented times.Act accordingly.

I heald my breadloaf for a week and i dont think it held its value, two weeks and the investment will be zero.

I think people would hedge with cheese sandwiches, if they were slightly more durable

Gold is thrash as long as paper gold contract exist

I feel like the bigger financial channels should reference your videos before posting theirs.

The problem with gold that means it doesn't work as an inflation hedge anymore is that for every ounce of gold in circulation there's 100 people that think they own it as everyone trades paper, which they could never all redeem for physical gold. This is why gold hasn't gone up over the last 10 years in my opinion and why it's down significantly when adjusted for inflation. BTC for comparison sake, everyone that thinks they own 1 BTC in a private wallet, actually owns 1 BTC. Just saying.

Golden butterfly is now sandwich butterfly.

Lol, millenials use s&p as a hedge and btc as their growth investment

Apparently not.

Gold is underpeforming, it doesnt make sense.

You sound confused. Once you say correlation, then you say follows inflation. Bottom line you should summarize first then expand on points. Just showing data does not mean you are drawing correct conclusion.

No

Shoulqd i buy gold? From my experience the answer is 100% NO.

No gold sucks.

Silly games against money printing. Everyone should just exit to bitcoin.