The price of gold is over $4000 an ounce

The price of gold is over $4000 an ounce. I remember it was around $2800 earlier this year, and it’s been a huge uptick. Of course, there were definitely reasons to go up, but I didn’t think it would be at this rate. It’s a formidable uptick.

I think about two reasons. One is the decline in the credibility of the paper currency. There is a different trend in the government bond market of major developed countries than in the past. Even if the benchmark interest rate is lowered, long-term interest rates are rising. Since the recent election of Prime Minister Takaichi Sanae, Japan’s long-term interest rates have been rising rapidly. Concerns are growing that market expectations that the rate hike will slow down will make it difficult to control long-term expected inflation… And concerns that higher long-term interest rates and higher fiscal spending will make Japan’s sovereign debt problem even more difficult. They seem to be hurting confidence in long-term government bonds at work.

France has reported that the prime minister has stepped down after a month. The 2018 tax cuts for the rich have only lifted asset prices, damaged tax revenues, and have shown no improvement in the lives of the working class.. The government’s demand for reducing welfare policies to fill the current fiscal deficit will not work at all. Austerity without social consensus… This tightening is hard to go by. So you have a lot of debt, but you can’t cut spending. And because growth is hard, the sovereign debt issue in France could be a big one. And that’s going to hurt the confidence in Eurozone government bonds,

Finally, the U.S.A. is not coming down easily, either. Yes, the 20 and 30 year Treasury rates are not coming down easily. Yes, the concern about the increase in government debt due to tax cuts. This seems to be a big part of it. If the shutdown is prolonged, it could slow down growth and reduce government income, which could lead to a bigger debt problem… Even if the shutdown is resolved, we can increase the government debt problem by reaching an agreement with the Democrats on welfare spending. Yes, it becomes a debt problem. There is talk that the fiscal deficit can be solved by collecting tariffs, but… It means reducing the fiscal deficit that could be increased by Trump’s massive tax cuts. It is not enough to reduce the huge fiscal deficit that has existed. And given the possibility of populism going ahead in the run-up to next year’s midterm elections, starting with support for U.S. farmers shocked by Trump’s recent tariffs… It would be right to weigh in on the possibility that the U.S. fiscal deficit will get worse.

And if the debt problem in the developed world is getting worse, we’re going to lose confidence in government bonds. And it’s not easy to solve the inflation problem. In the past, when you look at gold prices, the most important thing is real interest rates. Even if the nominal interest rate is high, if inflation is expected to go up, then real interest rates come down. And the Fed’s rate cut pushes the nominal interest rate. And now that the nominal interest rate that’s been pushed down like this raises inflation expectations, the real interest rate jumps. So, you have to keep the real interest rate low so that countries can reduce their real debt interest burden. And the belief that this downward trend in real interest rates is going to be prolonged, that’s what stimulates the price of gold.

It doesn’t matter if the dollar is strong, it just means that the dollar is king among paper currencies. Gold, the real currency, is showing a picture of the dollar, the leader of that paper currency. It keeps printing dollars, it lowers its value, and it’s been absorbing other countries’ wealth to preserve the value of those dollars, so it supports the overwhelming strength of the dollar in the paper currency, but… Reflecting the corruption of the entire paper currency… Gold, the real currency, is a long-term unusual structure of strong gold.

The other is his doubts about the hegemony of the dollar. Recently, ECB President Lagarde has once again spoken about the euro’s need to be prepared as the credibility of the dollar has been lost. Since April, this has been said almost every two to three months, and other ECB members seem to be joining the effort. And by shaking up the hegemony of the dollar along with the eurozone, China is also opening the door to the internationalization of the yuan. China has been opening its financial markets very fast since last year until recently. When currency is used by many people… It has the effect of increasing its value. The door to China as a whole is slowly opening up, but the pace of financial market opening through Hong Kong seems to be accelerating. China, along with the eurozone, is insisting on digging into the dollar’s broken hegemony.

In that context, the news that the Shanghai Gold Exchange is willing to take over the world’s gold consignment business can be interpreted. Right now, the UK is doing a considerable amount of global gold consignment business… I feel like I’m going to take away some of this status, and I’m going to ask Southeast Asian countries if they’re willing to leave their gold reserves in China. And by the way, once the Russo-Western War ends… No, just looking at the current situation before it ends… Most of Russia’s foreign exchange reserves have been seized by the U.S. and the Eurozone. So Russia has no reason to leave gold or foreign currency assets to these countries. But what if we leave them to China? Yes, in a world that’s becoming a bloc… It will have the effect of China holding a certain level of gold in the order of global blockification, which is being divided.

Keep gold in foreign exchange reserves in China… So now that we’ve got a block with China, these countries can keep more gold in the future, and if you go a little further, won’t they be more likely to build up their foreign reserves in gold rather than dollars? Because it’s not easy to trust dollar assets in China.. The yuan’s assets are not currently open to the financial market, so it’s going to be difficult because there’s no other product. That’s going to be coupled with increasing demand for gold in the blockaded countries. I think the noise from maintaining dollar hegemony is also affecting gold prices.

Essay line. Last minute of the holiday