Digitally traded Gold is a higher investment risk than Bitcoin and it's embarrassing

Gold is an asset that often comes up in conversations involving “hedging against inflation” and other times “store of value.” but the reality of the gold market makes the concept of gold being a safe haven completely flawed.

Recently, I recall spending a little over 3 days in a roll watching the gold chart on Tradingview. Half the time, I was impressed by its over 34% annual growth, about 40.90% at the time of writing this.

I was fascinated by how utterly sexy the yearly chart looked. 34-40% APR is simply a steal and to have that come from an asset with significant public recognition of its value, meaning some sort of stability and security, that's an even bigger steal.

But that might just be a blessing on the ignorance of the masses.

Similar to stocks, and most things traditional finance, Gold hasn't been something I paid any attention to. It may be a unique piece of asset but it's not portable, not divisible and supply is not controllable due to it being physical and naturally existing.

All these flaws make it the worst possible choice for building a currency for trade or economy around as evident in history. But this isn't about trade or economy, it's about personal investment, so what's so risky about gold that Bitcoin proves shiny in comparison?

A few days ago, one of the world’s largest refineries informed its customers that the London warehouses were empty and that the London gold market was dry of liquidity.

Confirmation last Wednesday: The Bank of England published the information that it would be able to deliver the gold currently awaiting delivery only in 4 to 8 weeks.

20 Moz are traded each day, or 100 Moz per week in the London Bullion Market, it is roughly a year of production traded each week. 27 Moz are traded each day on the COMEX.

96% of the gold traded daily on the London and New York markets has no physical reality. It is paper-gold or electronic-gold, which can never be delivered. Once the 4% of real physical gold has been delivered, what will happen?

Report: goldbroker.com

I stumbled on a tweet some days back highlighting the article above and it was simply interesting to gain some new knowledge on the gold markets and it just made me wonder why people still bought into the scam.

My understanding is that many, like myself before now, don't know about this. I've come across various gold-related ads through my digital journey and not once have I ever been exposed to any data on just how much more paper-gold existed than real gold.

We are frankly trading close to historical mistakes, there's quite too many instances in history that shows how this ends and none are positive outcomes.

When you trade gold today, digitally, you're sort-of buying a promissory note and you cross your finger and hope that you can actually claim real gold at some point.

Surely, many will try asking why bother with claiming physical gold when you can always liquidate to the fiat value at any time and that's exactly the problem.

If we wanted fiat, we wouldn't buy gold. In a situation where fiat becomes highly volatile(high inflation) most will want to take claims on physical gold to store away because at the end of the day, gold is a physical asset not a banking stock that can only be held on a digital platform.

So if we are printing an insane amount of gold, not even as futures contracts where it's understood that one isn't owning the underlying asset, we are essentially setting ourselves up for a major crisis.

The question is: what would happen if mass claims occurred?

First, I imagined that gold's value would crash, but it's quite the opposite. Physical gold would appreciate at insane levels, but the banking and financial institutions would be in great debt.

It's hard to imagine how worse this would get with tokenization. Fractional reserve banking really does a number on us and it's only a matter of time before this all burns to the ground.

Posted Using INLEO