Notes from Nagle

By Peter Nagle
​
Gold: what kind of investment is it? 

Gold is a difficult asset for an Advisor to recommend because it has nothing to measure it by. No earnings, no revenue, no debt to equity ratio, no P/E ratio, etc. nothing to measure it by, EXCEPT price. Which is to say, what it sells for and whether it goes up or down. You don’t have to buy actual gold to invest in it, you can buy either a Gold ETF, or, interestingly, a Gold Miners ETF. 

Today gold hit $3,983 per ounce. It’s up over 60% in the last year alone, which is a lot for anything BTW. Gold miners are up over 150% though! Miners are far more volatile than the metal itself. Before this past year Gold traded in a range for years. That’s what it has done historically: trades up and down for years, then shoots up, then trades up and down again for a long time. Whether that will happen now is anybody’s guess except for one thing: the reason it’s now going up. So let’s talk about that. 

Experts will give you various reasons why Gold has gone up so much recently. Usually they say it’s because it’s the only true store of value in the money world, as compared to Fiat Currencies (i.e. the dollar, Yen, Pound, etc), which can fluctuate in value and have nothing behind them but the “good faith and credit” of the country issuing them. And that’s a valid point. But why so much now? This is way more than the usual run up. 

I think there’s another reason happening here: the Dollar. First, a little background. The world operates on “Dollars”. The Dollar is the world’s reserve currency. This was decided after WW II by a bunch of old white men. Which means it’s what most countries use to pay for things worldwide. They convert their currencies to dollars and pay then. So what’s going on with the Dollar? 

Well, it’s declining in value vs other currencies. The Dollar buys less than it did even 3 months ago. If that keeps happening, it will buy less and less. That’s inflation as well as a dollar decline. Maybe that’s temporary. Maybe it’s not. What is making it decline? 

The reasons stated vary from the Trump-Effect (the negative side of it - some people think there’s only a negative side), to Climate Change. I think there’s another cause: Reserve Currency, as in: what would happen if we were no longer the Reserve Currency? Pres Trump thinks it would be a catastrophe, like losing a World War he has said. 

Anyway, if that happened gold would, in my humble opinion, explode in price. Yeah, go way up. Next time we’ll talk about the Dollar’s situation and the possibilities of outcomes. 

I provide financial advice to individuals in our Abiquiu community at no charge as a way of giving back. I also wear a completely different hat as a Spiritual Director. If you have questions in those areas feel free to contact me. I’ll do the best I can to help you sort through the issues. 

Peter J Nagle
Thoughtful Income Advisory and
Soulwork Spiritual Direction
Abiquiu, NM
505-423-5378 (mobile)
[email protected]