The top 10 facts in the 2023 #IGWT report.
A thread:
1. If the U.S debt ceiling is raised again, it will be the 79th increase since 1960, the 21st since 2000, and the 30th under a Democratic president. Republican Presidents have raised the debt ceiling 49 times. 1/
2. Gold, you are the apple of my eye… in terms of purchasing power! In 2007, the first iPhone cost $599 or the equivalent of 0.92 ounces of gold. Fifteen years later, only 0.75 ounces of gold are due for the iPhone 14 Pro, which cost $1,499 at its launch in September 2022. 2/
3. Despite US equities becoming more undervalued in the last year (Shiller P/E ratio 38.3 in 2021 vs 2022’s figure of 28.3), gold is still historically undervalued compared to US equities. The Gold/S&P 500 ratio of 0.49 is significantly lower than the long term average of 1.66 3/
4. Miners profit from prioritizing people and planet! A study by the WGC revealed that companies with the highest community scores achieved a total shareholder return of 63%, compared to just 14% for those with the lowest scores. For more, see page 333 of the report. 4/
5. 2022 saw the highest gold buying by central banks on record, i.e., since 1950, when the WGC started its records. Buying reached 1136t, with Türkiye reporting the largest purchases, adding 148t to its reserves. 5/
6. De-dollarization is a reality: Adjusting for FX movements, USD has lost about 11% of its market share since 2016 and 2x that amount since 2008. USD’s share of global currency reserves dropped to only 58% in 2022 from a share of 73% in 2001. 6/
7. After adding 128 tonnes of gold reserves over a six month period between November 2022 and April 2023, the PBoC’s gold reserves now officially stand at 2,076 tonnes. Jan Nieuwenhuijs estimates this amount could be twice as much at 4,400 tonnes of gold. 7/
8. Factoring in gold smuggling of 150–200 tonnes per year for the last 20 years, total gold stock in private hands in India amounts to 31,000–32,000 tonnes - more than the combined gold holdings of the top 27 central bank gold holders in the world! 8/
9. Silver inventories declined in 2022 by 430.9Moz from their end-2020 peak. This is equivalent to more than half of annual mine production, and also more than half of the inventories held in London vaults offering custodian services, as reported by the LBMA. 9/
10. Commodities are historically undervalued: Today the S&P GSCI is below 50, and each time it dropped below this level (1929, the late 1960s, and the late 1990s), a substantial commodities bull market followed. 10/
As is customary at every BRICS Summit, the leaders have accepted a declaration this year at Kazan, outlining decisions, goals, and agreements between the parties.
Here is a thread outlining everything in the declaration of importance to currency and banking:
1. The leaders of the BRICS countries express their commitment to enhancing financial cooperation within BRICS. They support the use of local currencies in financial transactions between BRICS countries and their trading partners.
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2. The document tasks the Finance Ministers and Central Bank Governors of the BRICS countries to continue considering local currencies, payment instruments, and platforms. They are to report back to the BRICS leaders by the next Presidency.(next year)
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3. The BRICS Contingent Reserve Arrangement (CRA) is recognized as an important mechanism to forestall short-term balance of payments pressures and strengthen financial stability. The document expresses support for the CRA mechanism improvement via envisaging alternative eligible currencies and welcomes the finalization of the amendments to the CRA documents.
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1. The high inverse correlation between US real yields and the gold price is history (for now). Despite the rise in real yields, the rise in the gold price could not be halted.
2. Central banks are a decisive factor in the demand for gold: Demand from these institutions is not very price-sensitive. Central banks are likely to have put a floor under the gold price.
3. The weaponization of fiat money has lasting consequences: The confiscation of Russian reserves and assets of Russian oligarchs in 2022 was a wake-up call for numerous states, as well as wealthy private individuals from the Gulf states, Russia, and China. (Luxury) real estate in London, New York or Vancouver has always been the preferred destination for savings
from emerging markets, but this has changed in 2022.
We feature quite a few charts, but our favourite remains the gold/Okteberfest beer ratio.
Gold has not only maintained its beer purchasing power over the last 12 months, the ratio even increased from 121 to 123 Maß Oktoberfestbier, despite the price increases in euros. 1/
We also feature the iPhone/gold ratio. Every year, the latest Iphone is more expensive than the previous year.
But not if you hold gold. The first iPhone sold for 0.92 ounces of gold in 2007. Fifteen years later, only 0.75 ounces of gold are due for the iPhone 14 Pro. 2/
Not only do holders of gold pay less than 15 years ago, but they also get a vastly superior product to that of the past, proving that gold is an excellent store of value. 3/
Introducing The Incrementum Recession Phase Model.
What assets perform well during a recession?
We look at 5 different phases of a recession and the performance of various assets during each phase. 1/
We analyzed eight recessions since 1970. Turns out that gold and mining stocks tend to perform quite well during a recession. 2/
We also look at different leading economic indicators to establish if a recession is imminent. Currently, all of
them are signalling an imminent recession. 3/
Gold as International Reserves: A Barbarous Relic No More?
This is the title of a working paper released by the IMF on the 27th of Jan 2023.
We summarized their findings for you below: 1/
In the past, the IMF considered gold to be a "barbarous relic" and advocated for its replacement with a more modern and flexible reserve asset, such as its own Special Drawing Rights (SDRs). However, in recent years, the IMF has changed its stance on gold.
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They now recognise the importance of gold in a diversified international reserve portfolio and the organisation now allows its member countries to hold gold as part of their official foreign exchange reserves.
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We list the top 5 worst cases of hyperinflation in history!
Let the countdown begin!👇 1/
#5 The Greek Hyperinflation of 1941-1944: Greece experienced a severe episode of hyperinflation during the German occupation in World War II. The inflation rate reached an estimated 50% per month, causing widespread poverty and social unrest.
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#4 The Zimbabwean Hyperinflation of 2007-2008: Zimbabwe experienced severe hyperinflation in the late 2000s. The inflation rate reached an estimated 79.6b percent per year, causing the country's currency to become worthless and leading to widespread poverty and social unrest. 3/