It is not unusual for gold price to be driven solely by investment demand during it's final blowoff phase, which could last
years.
It is rare for gold to be driven by investment demand. What you're referring to as "investment demand" is actually speculative demand. Investment demand is indicated to occur when POG rises with short rates or when POG rises with inflation when FED uses Keynesian pumping to suppress bank demand for interbank, fed fund rate adjudicated, funds.
While, yes, this could be fearful suckers buying in, and they are, there are also reports of GLD holdings by large investors
such as Soros.
Soros is a liar. You don't know what he's really doing. If he has any sense, he's selling into strength. A big player can't gamble on possible Hormuz events. They must distribute into nominal strength. There's nothing worse than trying to sell into a commodity down side and equally difficult to sell on a spike up. Both are illiquid, transient states.
Gold is being purchased because of the current government bond crisis, which could end either in major monetization
or default.
There is no "current government bond crisis". What evidence do you have to support this claim? Reports from DManiamedia? The overt evidence, low rates on all government bonds, argues the opposite. A bond crisis occurs when inflation is upon us, that is, when +rorocGPL, because the bond's yield comes in deflated purchasing power.
Physical gold can't be printed, and default is not an issue either.
Neither is it fungible. Please tell me what one does with gold when when one wants to get out of it. It's back to fiat paper. One goes into a store to buy a loaf of bread. The store will only take gold. One ounce buys you one loaf. Take it or leave it.
And, by the way, default is possible as you will learn.
It is always assumed by 'Bugs that all the things they need in life will remain the same after some event makes them rich in the gold market.
They haven't thought out anything. Having gold makes you a target for robbery and murder. Going to the coin shop to transact in gold could be extremely dangerous. In general, the 'Bugs haven't figured out what an end game could look like, but it won't be like what they imagine.
Thus, gold is simply safer than government bonds
Governments have "full faith and credit". That means power to tax. Governments can confiscate gold or bust its market price turning all 'Bugs into paupers. Indeed, in the circumstance of a Hormuz event gold becomes perfectly not fungible, and therefore worthless. when gold would be outlawed. All value is relative.
and investment is partially diverted from government bonds to gold.
Gold is cashed for yield. That's what the distributors are doing. Yield on government bonds is sure up to the power to tax. Value of gold is zero down to Hormuz events. The only true money now is credit. This is impossible for coin biters to comprehend, however, society, existence, isn't possible without credit. |
