A recent video ad produced by a digital currency asset company titled “Drop Gold” created some waves on social media last week. The ad encourages investors to drop gold from their portfolios and replace it with digital currencies such as Bitcoin. “In a digital world, gold shouldn’t weigh down your portfolio,” the ad proclaims.
But is Bitcoin really a replacement for gold? While the Drop Gold ad may seem clever and cute, cryptocurrencies aren’t a replacement for gold.
Gold demand was up 7% year-on-year in the first quarter, according to the World Gold Council Gold Demand Trends Q1 2019 report.
Total global demand came in at 1,053.3 tons, driven primarily by central bank buying, inflows of metal into ETFs and strong demand for gold jewelry.
Australian mines are running out of gold, according to a report by S&P Global Market Intelligence.
Analysts say Australia sits poised above a “production cliff.” The country could slip from the world’s second-largest gold producer to fourth by 2024.
The Australian gold mining industry faces the same problem as South Africa’s – aging mines.
It looks like the Federal Reserve is about to get back into the bond business and help the US government deal with its massive debt.
The Treasury Department announced yesterday that it will not have to borrow as much money in the third quarter of fiscal 2019 as originally anticipated. But this is not because of a slowdown in government spending. According to a Treasury official cited by Reuters, the reason for the lower borrowing estimate is due to an anticipated increase in Fed Treasury holdings as the central bank ends its balance sheet reduction program.
Central banks added more gold to their reserves last month, continuing a trend that stretches back into last year.
Globally, central banks added another 31 net tons of gold in March, according to the latest report by the World Gold Council based on International Monetary Fund data. That brings the total increase in central bank gold holdings this year to 145.5 tons.
Month after month, the Trump administration runs multi-billion dollar deficits. The national debt has ballooned to over $22 trillion. According to the most recent Treasury Report, the US has a net worth of negative $21.5 trillion. And this understates the problem.
As Wolf Richter of WolfStreet puts it, the US government has “debt out the wazoo.”
Is this sustainable?
The Reserve Bank of India has jumped on the gold bandwagon.
Since December 2017, the Indian central bank has added 50.4 tons of gold to its reserves.
India bought 8.2 tons of gold in January and February of this year and analysts project that pace to pick up. Economist Howie Lee told Bloomberg he expects the RSB to add as much as 1.5 million ounces of gold to its reserves in 2019. That comes to about 46.7 tons.
This has become a monthly feature here a SchiffGold News – Russia buys more gold.
The Central Bank of Russia added another 18.7 tons of gold to its stash in March according to a press release last week. This boosts the country’s gold reserves to 2, 167.9 tons or 69,700,000 ounces. Gold now makes up about 18% of the Russian central bank’s reserves.
The silver-gold ratio currently stands at about 85-to-1. As one commentator put it, that’s “way out of whack.”
But what does this really mean?
In simplest terms, this is silver on sale!