I'm glad Rand have a stack of gold locked in the Perth Mint

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0	Column 1 0 Smart Investors Accumulate Gold by Weight, Not Price​ By Jim Rickards​

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0	Column 1 0 Ah, the price of gold! Everyone looks at “the price of gold.” Let’s put a little definition around that, because it’s not as simple as it may seem. Let’s break it down... Measured in dollars, gold has fallen 10.8% from its 2018 high. It dropped from $1,358 per ounce on Jan. 24, 2018, to $1,210 per ounce on Aug. 6, 2018. Yet a longer perspective shows gold is up 15% from a secular low of $1,051 per ounce on Dec. 17, 2015 (when the Fed FOMC started its “liftoff” on interest rates) to the $1,210 level last week. Measured in IMF special drawing rights, or SDRs, gold fell 8.8% from 950 SDRs per ounce in September 2016 (just before China’s yuan entered the SDR valuation basket) to 866 SDRs per ounce on Aug. 6, 2018. In euros, gold rose mildly from 980.43 euros per ounce on Dec. 17, 2015 (Fed liftoff date) to 1,049 euros per ounce on Aug. 6, 2018, a 7.0% gold rally. So when we ask if gold is up, down or sideways, the answer is yes. Gold is up in dollars and euros off a secular bottom. Gold is down in dollars from its 2018 high. Gold is also down in SDRs from China’s entry into the SDR, although a rally in SDRs is easily forecast based on China’s 900 SDR target. In short, gold is up, down and sideways depending on your time frame, turning points and numeraire. The examples above are all accurate, yet I could easily produce an even wider distribution of price action by adding currencies (sterling, anyone?) and stretching or condensing the timelines. As you can see, the price of gold at any given time requires context. All of which points to a more profound issue. Simply put, there is no anchor in the system. Gold can be shown to produce enormous gains (using $35 per ounce on Aug. 14, 1971), enormous losses (using $1,950 per ounce on Sept. 1, 2011) or meaningless price moves measured in Venezuelan bolivars or Zimbabwe dollars. Take your pick. Whether or not you “made money” in gold depends on your entry and exit points, your baseline currency and a host of other factors including taxation, local jurisdiction, etc. A more thoughtful analysis would say that since gold is money and we have a globally unanchored system, then you never make or lose money in gold; you just adjust the quantity of your holdings. That’s how I think about it. If I own 100 ounces of gold, that quantity by weight can go up or down (usually up), but the dollar price is irrelevant since that’s an arbitrary benchmark, not a real one. In fact, the only form of money suitable as a benchmark for other money is gold itself, because it’s the one benchmark that can’t be printed at a zero marginal cost. Why privilege the dollar instead of gold by weight? Still, it’s fine if you do; it’s just another arbitrary choice. These distinctions are not merely theoretical. Many large investors in gold have already made the transition. Russia has dumped almost all of its U.S. Treasury securities holdings and other dollar-denominated assets. It acquires gold steadily, about 10–20 tons per month, including from late 2014 to mid-2016 when its overall reserves dropped about $200 billion. Russia didn’t “play the market” in terms of dollar pricing. It just kept a standing buy order open and settled on amounts that kept its gold reserves growing even as dollar reserves shrank.

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Column 1 0 China is likely the prime actor behind what appears to be a new peg of gold in special drawing rights (SDR) pricing centered at 900 SDRs per ounce. China’s motives are the same as Russia’s even as its tactics vary. China can preserve the value of its SDR and gold assets by pegging one to the other without reference to the dollar. The purpose of the peg is to get out from under dollar hegemony and into a world of other reserve assets (SDRs and gold) that retain value through a cross-exchange peg. The IMF itself keeps its books in SDRs and maintains a pure gold reserve of over 2,000 tons. Germany has moved half its physical gold from New York, London and Paris back to Frankfurt. The Netherlands, Austria and other countries are in various stages of physically returning gold from New York to their respective capitals. Russia, China, Iran and Turkey are the key members of a “New Axis of Gold” that is replacing dollars with gold as the key reserve asset as circumstances permit. The use of gold allows these nations, that share many interlocking interests, to bypass the international payment system that’s dominated in dollars. Funny how many of the nations opposing dollar hegemony are under U.S. economic pressure these days, Turkey being the latest. The Trump administration launched tariffs against Turkish steel and aluminum imports Friday, which helped a massive selloff in the lira. Has the U.S. launched the latest sanctions against Turkey to punish it for its recent anti-dollar rhetoric? And Turkish president Erdogan has expressed the desire to move the system away from the dollar. “I believe that efforts to do business with countries such as Russia, Iran, China, South Korea in local currencies and alternatives such as borrowing in gold are vital to escape exchange rate pressure,” Erdogan has said. Don’t forget, the Turkish Central Bank decided to bring its 220 tons-worth of gold home from the U.S. this spring. Look beneath the headlines and you’ll find a lot of answers. What all of the moves we’ve seen lately have in common is they are not carefully timed plays for dollar profit and loss. They are outright shifts from dollars to gold without price sensitivity at the time of substitution. And it leaves to differing gold prices, depending how you measure it. This is the world we live in today. Most retail gold investors are overabsorbed in the “dollar price” of gold without observing that the dollar price is increasingly irrelevant. The largest investors in the world (Russia, China, Germany, etc.) are simply de-dollarizing and are converting dollars to gold in a way that’s price-insensitive. They just want the gold, and are not as concerned about the dollar price as many investors are. That’s why I recommend gold too, regardless of its dollar price. Think of gold as money, measured by weight. The time has come for savvy retail investors to see gold as a simple form of money best measured by weight, not a dollar price. Gold should be acquired in reasonable quantities (I recommend 10% of investible assets) and kept in secure nonbank storage (the banks will be shut when you most want your gold). There’s no harm in looking for good entry points and avoiding mini-bubbles in gold prices. Yet accumulating gold by weight without undue regard to the dollar spot price is the goal. If the price of gold moves sideways or down a little, you won’t make or lose much money. That’s fine; it’s like another form of cash. If gold soars, you’ll make a dollar-denominated fortune regardless of your particular entry price. That’s fine too. The danger is not having the gold in the first place and not being able to acquire it when the demand and price are soaring and there’s no supply. At that point, you’re just a spectator. The gold train has passed you by. Regards, Jim Rickardsfor The Daily Reckoning

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