gold-price-in-crisis

The word “gold standard” is a phrase that is commonplace in everyday language.  In economics, it refers to a country’s monetary system whereby currency has its value linked directly to a fixed quantity of gold. This term has obviously seeped into other fields to connote consistency and high value. Indeed, the status attached to gold stems from millennia of consistency as the most valuable precious metal. Given that most countries no longer use the gold standard, gold retains a unique position in investment circles as a “safe-haven” investment. This tag comes from a number of factors that make gold uniquely suited for this purpose. Living in highly unstable times with the US-China trade war, Brexit and dollar devaluation, people’s concern as for how the gold prices will behave in crisis has grown.

Market Turmoil and Gold Prices

Gold prices are drastically up in 2019. As a matter of fact, the price trajectory this year is similar to 2011 when the gold prices almost hit a record $2,000 per ounce. 

The appreciation of about 18 percent year-to-date prices has led to analysts like Citigroup predicting the $2,000 price could be within reach again. In general, having gold holdings in this market conditions is certainly a profitable venture.

Market events are obviously a great part of this phenomenon. Gold prices in crisis hav grown dramatically. The six-year highs in gold prices come from factors like the heightened trade tensions between the USA and China and fears of a general economic slowdown globally. Moreover, the political unrest in Hong Kong and potential market fallout from Brexit are adding strong tailwinds to the momentum in gold prices.

The Response from Central Banks and the FED

There are parallels between events the last time gold prices were this high in 2011 and now. In both instances, in an effort to manage recessions or possible recessions, the Federal Reserve uses easing mechanisms mainly in the form of flooding the financial system with money to help ignite the economy. 

Following the last economic crash of 2008, central banks cut interest rates to pretty much zero and used quantitative easing to revive markets. Given the fact that the Federal Reserve does not usually flip on policy on a short-term basis, this could be the start of a long-term easing path to prevent a full-blown recession.

The most durable determinant of gold prices in crisis is investor sentiment on the purchasing power of the USD and major currencies. Indeed, treasury securities also play the market role of being alternative investments to stock options. 

However, given the fact that the US treasury securities market has been in a bull market for over 30 years, it is only fair to say that this market has seen its best days. The debt situation of the United States for instance means that it is only a matter of time before the American economy has to reset. This is short of predicting a full-on economic crisis. 

However, it is clear that the monetary system as it is, without the backing of a “real assets,” like gold cannot thrive forever. Gold is a real asset because it does not derive its value from anything else.

Lower Bond Yields VS Gold Prices

 The recent tumble in the 10-year Treasuries to below 1.5 percent, and a USD decline relative to the Japanese Yen, raised eyebrows. Both are indicative of a weaker dollar in the near term, which is typically bullish for gold. Combine this with potential lower interest rates and gold offers a stable alternative to bonds and savings account. 

Low interest rates mean little or no return in savings. This trend will be likely be global because when America coughs, the rest of the world catches a cough. Germany is already in recession while Japan still has very low interest rates.

Gold prices in crisis are, therefore, up and will likely rise further to reflect prevailing economic conditions. With lower US dollar values, gold is a more attractive investment in other currencies. Even in the event that the USD strengthens and gold prices remain flat, gold will be more expensive in currencies whose value slipped more than the US dollar. In general, gold is a way to hold and preserve value in the face of uncertainty and solvency crises in markets. In a weaker economy, investors will flock to gold as a stable investment.

The Nexus between Gold and Cryptocurrency

 Cryptocurrency is now a prominent alternative digital investment. It has parallels to gold primarily because cryptocurrency is independent of the influence of stocks and bonds. 

In this way it offers alternative investment opportunities to stocks. Cryptocurrencies like Bitcoin have offered investment opportunities to many investors across the world.

Tokenization and Gold

What’s unique about cryptocurrency is the fact that it is virtual in nature. An investor does not hold physical cryptocurrency but instead has private keys to their location on the blockchain. The following is how you can have a tokenized gold platform.

Imagine the aforementioned gold standard in cryptocurrency.  How does that work? You would wonder.  Well, if the gold standard is a monetary system where each unit of currency has direct backing of physical gold, tokenized gold is an opportunity for investors to own crypto tokens directly tied to physical gold. 

This is how the concept of tokenized gold works. Obviously, this has to be a platform with inherent design qualities that make the entire ecosystem function. 

Novem Gold for Tokenized Gold

Novem Gold is a unique platform that seeks to transform the way gold is bought, sold and stored worldwide. The platform actualizes the concept of tokenized gold to create a fully-functional and secure ecosystem to provide excellent services.  

Gold is certainly a choice precious metal because of its consensus value and consistency over Millennia. Novem Gold combines the experience and connections of experienced international gold traders and technology experts for a secure way to trade and store gold digitally.

Novem Gold offers two types of tokens. The first is NNN tokens which have strict LBMA-certified gold backing. You can redeem these tokens for gold.  The second token is the NVM utility token through which token owners can transact gold on the Novem Gold ecosystem.

As such, Novem Gold seeks to open Brick and mortar stores across Europe to serve this end. Investors are able to tokenize their gold and store it securely. Besides, Novem Gold platform is a way to easily trade gold without the hustle of physical delivery.  

NNN tokens can be redeemed for gold even in the very unlikely event that Novem Gold goes bankrupt.  Novem Gold stores its gold secures in Liechtenstein which has the suitable regulatory and security climate in place.

With a potential prolonged gold bull run in the horizon, gold trading has to be a way for investors to secure value in solvency crises. Novem Gold gives investors the rare ability to both hold gold and have the convenience of digital control over their holdings. Tokenize your gold today and enjoy the convenience of seamless tokenized gold trading.

To learn more about Novem, visit: https://novemgold.com

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