Gold Stocks Typically Don’t Pay a Dividend, If cash flow is important to and you respect your time, think twice – March 13, 2020,
If you want or expect to get rich off of Gold Stocks, be aware, that if Gold Stocks rally, the government will come after your capital gains! Dividends pay the bills, fiat money, this entire monetary theory that ancient civilizations wish they had, that has brought us global trade at a level that’s unimaginable to fathom, will not allow one asset class to dictate trade.
Now, if you were to ask me about physical gold and physical gold prices, why of course, the value of gold will go up, but I warn you if a future president or world leader brings up global debt restructuring, which is something at least 25% of the financial world is thinking about right now, the price of Gold could retreat.
Most of the US dollars in circulation right now, I remind the reader that it’s digital, not physical, debt for digital dollars is actually a good thing, it’s simply a digital change, which would deflate global asset prices, now, deflating global asset prices will be a problem for governments which are over-leveraged, but you see most governments are overleveraged because their unionized public sectors have wages which keep up with inflation, so I ask, wage deflation for the public sector will be the huge topic as well as retire income being deflated will also be the talk.
The worst part of all this will be certain private companies’ inability to lower their prices, possibly because employees refuse to take a pay cut. Deflation of the USD is the only way out of this or there will be an end to the dollar and Gold Standard might emerge but in this political climate a gold standard would equate to the nationalization of inefficient gold mining companies, so I assume in the end what’s going to happen is sloppy debt renegotiation, which in time is going to force interest rates up.
By sloppy debt renegotiation, I personally believe the public sectors all over the world are going to fight against wage and benefit cuts, a reminder that most public servants all over the world don’t get paid market wages and to top it off they have the best pensions in the world, well, the reality is all of these financial disasters are their fault and they have to take the hit, individuals heavily in debt, I assume will have their debt reduced to match the renegotiated debt.
It will be a global contraction, that will more than likely be explained in terms only the financially literate can understand. I suspect this event occurring over a gold standard, I assume Donald Trump wins a second term, I also think most working people will like it because in U.S dollar terms debt restructuring will be a stimulus for you if you’re not in debt!
The people who will suffer the most are the people who are in debt, in negative levels of debt, because the restructuring will equate to a spike in interest rates and this spike in interest rates benefits countries like fiscally responsible countries, who will see their currency shoot up. The cheaters will have a hard time, adjusting to the new normal and I suspect all assets will increase in the values of those currencies.
Is the era of a Gold Standard dead? No, however, if people want there to be a gold currency, there will need to be private-sector support for it, something I think is unlikely until Gold is considered a heavily consumed industrial precious metal!
Interesting times ahead!