Is Gold considered as investment or insurance?

[Temperament]

This market story just more or less repeat itself.

Maybe can add stock markets going to crash too.

And imminent war with Iran or even China may be soon.

Especially if Iran don't comply to BB.

Without story telling, where can people move the market.

It doesn't have to be true story , just can move the market is enough for some people.

Ha! Ha!

True or false?

[Temperament]

Gold for me is more for insurance (part of emergency standby fund) which nobody would like the day to happen.

Just like who would look forward to use his life insurance?

I have a little gold since 30+ years ago.

My wife's nick nack gold jewelleries we have not even sell at the peak prices of gold throughout the years.

Don't get me wrong 😂.

It is always her suggestions to sell her gold jewelries at gold peak prices time.

She doesn't fancy them. It not fashionable, she thinks. Which woman doesn't likes fashionables?

Maybe it's time for me to agree to sell at one of the peak prices of gold because it just an asset that does nothing.

Maybe?

[Luke]

Tell her that yes, you are ready to do what she likes, sell the jewelries at gold peak prices,
than keep telling her that gold peak prices are still not there

[Luke]

I think there could be something true in the article's title

Bullion the bully: Beijing answers Trump’s tariffs with massive gold-buying spree

China’s vast gold stockpile saw another boost in May, marking an ongoing increase for a sixth straight month, according to the latest data published by the People’s Bank of China.
Last month, the central bank raised its bullion reserves to 61.61 million ounces from 61.10 million in the previous month. As of the end of May, the nation’s stockpile was valued at $79.83 billion compared to $78.35 billion a month earlier. In tonnage terms that marks an increase of 15.86 tons, after almost 58 tons of gold were added over the five months through April.

In May, the country’s total foreign exchange reserves, the world’s largest, reportedly edged  0.2 percent, or $6 billion higher, reaching $3.101 trillion. The increase shifted the expectations of analysts polled by Reuters, who projected the reserves to drop by five billion to $3.090 trillion.

The latest boost to Beijing’s gold stash reportedly reflects China’s move towards diversifying its bullion and foreign currency holdings amid the protracted trade dispute with the US.

Chinese authorities are seeking “determined diversification” away from US dollar assets, according to Helen Lau, an analyst at Argonaut Securities, as quoted by Bloomberg. The expert expects China to buy 150 tons of gold by the end of the current year.

https://www.rt.com/business/461525-china...trade-war/

[Temperament]

Ha! Ha!

It's true Peak of Peak prices happened in 03 Sept 2011 - $72,935/KG.
based on BullionStar historical charts.

Now can't go over $59,000/Kg.

Teo Cheow says, "Tan Koo Koo Chu Woo".

Same as stock market cycles?

[Bibi]

Perhaps only our parents or grandparents generation who went thru world war can appreciate the value of physical gold. If another world war breaks out i believe our sgd will be badly affected.

[RJT]

I would say gold is both an investment and insurance.

Following the strict definition of value investing, gold cannot be considered as an investment because it isn't an asset that generate cash flow. That is the same as owning Mona Lisa painting, Tang Dynasty porcelain or Nike Air worn by Michael Jordan. This is the logical point of view.

From the psycho-logical point of view, if you tell people who owns a pink diamond, 1980 Rolex watches, classic wines, vintage cars, Louis Vutton limited edition bags etc that those aren't investments, they will look at you like you're from outer space. Because there is a mindshare in all those objects/products, which the owner believe will increase, or at least retain, its original value. So if something can retain its value, that is, not being erode by inflation, is it considered both an investment and an insurance.

That is the same with gold. Of course whether you should have gold as part of your portfolio is another story for another day.

And it also depends on the timeline you're looking at. Gold has been known to be collected by human since 4600BC. When will it become 'worthless', that is too hard to tell. Seashells as a currency quickly die out in a matter of few hundred of years. Diamond didn't become the sought after rock until the 20th century. But what all of these have in common is that there is an unconsciously agreed value in them, despite the fact that they don't produce any single cash flow. The value comes from the psychological understanding of scarcity and emotion which the object evoke. And talking about emotion, our desire to achieve happiness and freedom is the fundamental engine that drive the stock market. 

For investor who doesn't regard gold as an investment, if you offer that person a 1kg gold bar for free (even with a rule that he can't sell it for 10 years), would he take it? Hell yes he would. But would you call him irrational or speculative? You won't. We are all 'irrational' as much as we like to think we are rational.

[Luke]

Perhaps only our parents or grandparents generation who went thru world war can appreciate the value of physical gold. If another world war breaks out i believe our sgd will be badly affected.

You are right in saying that the old generations understand gold's value better than the new ones.
Financial products were not so sophisticated like today.

My second thought is, even today there are countries where the national currency is quickly depreciating, so you don't need to look for the old generations, or for war, in order to find people who understand gold's value.

My third thought is, we talk about gold when we talk about crises.
Gold as the crisis currency.
Gold as an hedge against financial collapses.
Gold and war
And so on

I don't share this assumption.
I think gold should have a central role within the financial system also in normal times, both as investment and as currency.
Yes, I support the idea of a gold standard

[Luke]

Following the strict definition of value investing, gold cannot be considered as an investment because it isn't an asset that generate cash flow. That is the same as owning Mona Lisa painting, Tang Dynasty porcelain or Nike Air worn by Michael Jordan.

That means value investors buy only stocks which offer dividends.

The value comes from the psychological understanding of scarcity and emotion which the object evoke.

As far as gold's value goes, that is too simplified, as it doesn't explain gold's unique historical role as money and as currency.
Gold offers something more than scarcity and emotions I guess.

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If Gold Was Just A Barbarous Relic...

There’s nothing new about the Russian accumulation of gold bullion in their reserve position. It began in a material way in 2009 when Russia had about 600 metric tonnes of gold.
Today, Russia has 2,183 metric tonnes, a stunning 264% increase in less than 10 years. Russia is the sixth-largest gold power in the world after the U.S., Germany, IMF, Italy and France.

One reason is as a dollar hedge. Russia is the second-largest energy producer in the world. Most of that energy is sold for dollars. Russia can hedge potential dollar inflation by buying gold.

Another reason has to do with the avoidance of U.S. sanctions. Gold is nondigital and does not move through electronic payments systems, so it is impossible for the U.S. to freeze on interdict.

Yet a deeper reason is that Russia has a long-term plan to subvert the dollar’s role as the leading global reserve currency. The Russian ruble is not positioned to be a reserve currency, but a new cryptocurrency backed by gold would be a good candidate.

The Central Bank of Russia will consider a new study that suggests just such a gold-backed cryptocurrency to settle balance of payments among willing participants. This plan is in its preliminary stages and is a long way from reality at this point.

Still, the Russian endgame has now been revealed. The dollar’s days as the leading reserve currency are numbered.
Of course, Russia is not the only nation accumulating gold as a means to move away from the dollar. You can certainly add China to that list, and many others.

The latest move comes from Malaysian Prime Minister Mahathir Mohamad. He promoted the idea of a common trading currency for East Asia that would be pegged to gold.
“The currency that we propose should be based on gold because gold is much more stable,” he said.

But, the announcement is highly significant in another way. It signals that the demand for physical gold by major central banks is here to stay. Whether a new gold-backed cryptocurrency emerges next year or five years from now does not alter the fact that you need gold to have a gold-backed currency.

Neither Russia nor China has all the gold it needs for that purpose yet. Therefore, demand for physical gold will remain strong even as supply has flatlined.
This creates an asymmetric trading pattern where gold has good potential to rise, but only limited prospects of a material fall.

Russia has been buying between 15 and 25 metric tonnes per month, sometimes more, for over ten years. Russia’s gold reserves now stand at 2,183 metric tonnes, over 25% of the U.S. total with a far smaller economy. China is less transparent in its gold buying but also has over 2,000 metric tonnes, perhaps much more.

Neither Russia nor China have their targeted amount of gold yet, which would be 4,000 metric tonnes for Russia and 8,000 metric tonnes for China to achieve strategic gold parity with the U.S.

https://www.zerohedge.com/news/2019-06-1...rous-relic

[Luke]