Gold as a rock in the surf
Gold as a rock in the surf
The financial system is vulnerable. But it is essential for our daily financial life. If everything goes wrong, gold should not be missing in the portfolio.
Claudia Buch is her name, and she is putting her finger in the wound of our financial system. "At the moment, we are seeing increasing vulnerabilities and a declining awareness of risk in the financial system," says the deputy head of the Deutsche Bundesbank in an interview with Handelsblatt. What worries her, she says, is that the search for returns in the financial system is taking center stage. Why does the woman come up with such a view and statement? Buch assumes that banks could underestimate their future risks. The capital buffer that banks would then need might now be too low because of the pandemic and the suspended countercyclical capital buffers.
On the one hand, the risks come from loans to companies that may no longer be able to bear their burdens, precisely because of the consequences of the pandemic. On the other hand, price developments on the real estate market should also be viewed critically. Lending for real estate has increased sharply recently. Will our financial system be able to cope if banks snap to attention because of their somewhat too generous lending or, better, weak risk assessment? If so, but only with strong help from central banks, which would have to pump a lot of money into the system again. Fighting the rolling avalanche of inflation would then be impossible in the medium term. That, in turn, would force a significant appreciation of gold as a value-preserving investment vehicle. 2000 U.S. dollars per ounce would then probably be a conservative price forecast.
And if "no"? Then we would have a collapse, in which gold would have to serve as the last anchor for savings anyway. Perhaps such a phase would be shorter, but it would probably be much more destructive for savings. The conclusion can only be that gold belongs as an admixture in the portfolio. If the Bundesbank is already warning, then it should rather be ten to 20 percent or even more than the five percent usually discussed among financial professionals.
Shares in companies with gold projects could then also perform well. As an admixture, they would also be worth considering for investors willing to take risks.
Victoria Gold - https://www.youtube.com/watch?v=oLZm4d0y-M4 -, for example, owns the Eagle Gold Mine in the Yukon. In the first nine months of 2021, nearly 115,000 ounces of gold were produced there.
Vizsla Silver - https://www.youtube.com/watch?v=_j64jE24xLo - is working on the previously producing Panuco property in Mexico, which contains high-grade gold and silver.
Latest corporate information and press releases from Victoria Gold (www.resource-capital.ch/en/companies/victoria-gold-corp/) and Vizsla Silver (www.resource-capital.ch/en/companies/vizsla-silver-corp/).
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