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Gold has traditionally played a key role in the financial sector, becoming the most common safe haven in market storms. Its crucial role in a financial portfolio remains unchallenged and it seems very likely to continue for a long time. Gold represents stability, with central banks increasing their holding of bullion as reserves. Despite this, investors are always fighting against the markets while trying to find the best timing for buying bullion. Another interesting point of analysis is the distinction between buying physical gold or paper gold and what are the advantages of both. This article starts by explaining the current scenario for bullion, before analyzing the market drivers which are forecasted to move the gold price in 2022. The analysis continues to present the advantages offered by Kinesis Money to gold investors. What is the current state of the market? In the last few months, investors faced a challenging scenario. The Federal Reserve announced the beginning of tapering, while inflation continued to soar in the U.S. and in several other countries, proving to be much less transitory than forecasted by Central Banks. Moreover, the battle against Covid-19 is not yet over, with spikes of volatility due to the news related to the pandemic. Despite this, stocks continued their long rally that started in April 2020, with the market capitalization of almost all the major indices now surpassing pre-Covid-19 records. For example, the S&P 500 has reached the 4.700 points mark, around 900 more than the top of February 2020, while the Dax topped above 16,000, before slowing down after the growing fears related to the new Covid-9 variants. On the bonds market, the yield of the U.S. 10-year treasuries remains in the region of a modest 1.50 – 1.70%, well below the current level of inflation. But the scenario could change if inflation pressure continues to rise, or in the case that investors sense a risk that the price growth seriously goes out of control. Once again, gold seems ready to play a crucial role in the markets. Investing in Gold in 2022 There are not many certainties in the financial environment. However, it is certain that gold will continue to be a crucial asset for an investor’s portfolio, despite potential changes in the market. Why invest in Gold in 2022? The reasons for holding gold might be various and at times - complementary. Firstly, consider investing in gold in anticipation of its price rising. By holding your gold long-term, you can expect to achieve a capital gain as the price of bullion increases over time. 1. Gold is an appreciating store of value Charts speak for themselves, especially in a longer timeframe: Gold Chart from 1971-2021 - Gold climbs from $35 to $1,800 Over the past 50 years, gold achieved an average yearly performance of +10.6%, while in the last 20 years bullion price increased by 600%. The former historical top of 2011 at $1,920 was surpassed in the summer of 2020, when gold temporarily jumped above $2,000, before slowing down to $1,800/1,900. 2. Gold is a Safe Haven Another reason to incorporate gold into a portfolio is to protect yourself in the event of stock market turmoil. Historically, bullion has proved to be an excellent safe haven in the unfortunate scenario of share market collapse. An example of that was observed throughout the global stock market crash in February 2020, when gold managed to retain a positive performance (excluding the first chaotic weeks of March, where many traders were forced to close their position in gain on gold, in order to avoid margin calls on stocks and bonds). 3. Don’t put all Your Eggs in One Basket Holding gold is an excellent way of diversifying a portfolio, in line with the wise advice of Don Quixote. Gold is a unique commodity, with a low correlation to the majority of raw materials - and can also be used to mitigate potential risks. 4. Gold is a Hedge Against Inflation and Market Adversities Speaking of risk, bullion is well-suited to play an important role in the event of currency market turmoil. Central banks printed trillions of dollars, euros, pounds and yen in the last few years. As we try to crawl back to so-called normality, the Fed’s hawkish monetary policies might not necessarily make it any easier. If investors lose their trust in central banks, gold could definitely jump to new highs. Therefore, its safe-haven role is also remarkable when analyzing the forex market. For investors, based in countries where the local currency is extremely volatile - as in Russia, India, or Turkey for example - gold could also be used as a hedge against further depreciation of the native currency. Moreover, bullion could also be held as a hedge against inflation. However, this subject may turn out to be a little tricky, as the relationship between gold and inflation is not always linear. What are the main market drivers for gold in 2022? Any gold price forecasts for 2022 should take the inflation rate and the Fed’s monetary policy into consideration. Of course, the development of the pandemic should be carefully monitored. Now, let us analyze the main elements for gold investing in 2022, in more detail: 1. The Federal Reserve’s attempts at curbing Inflation Despite the Federal Reserve’s tapering announcement, gold managed to perform positively in October and November 2021. This happened mostly due to growing fears around uncontrolled inflation, which remains a central topic as we enter the new year. Indeed, in the event of investors losing their perception of central banks having enough control over price growth, a gold buying spree may ensue. Therefore, inflation and the central bank’s decisions over interest rates are two crucial market drivers for the gold sector. 2. Gold-backed ETFs In recent times, the demand for gold coming from physically-backed ETFs, has shown a strong correlation with the gold price. The growth in this sector could further boost the price of gold, in case the inflows continue. Price of Gold & ETF demand - From the World Gold Council (WGC) 3. Growing Demand for the Physical Gold In the last decade, we have seen strong demand for physical gold coming from central banks. Many countries, including Russia, China or Poland, vastly increased their gold reserves. It will be interesting to see whether this trend will continue in the next few years. Jewellery historically represents a strong percentage of physical gold demand. In this case, analysts are trying to forecast the solidity of jewellery sector demand for 2022-2025, and its potential impact on the bullion price. What are the key levels for the gold price in 2022? If we take a look at the 2019-2021 gold price chart, we can identify many interesting support and resistance points that can later aid us in monitoring the year 2022. Gold Price - from 2019-2021 Let us start with analyzing the key resistances - the areas which can curb gold appreciation, and where we could expect sellers to be more active. In the current scenario, with bullion traded at around $1,800, the first major level to monitor is placed at $1,870, on the top reached in November 2021. A surpass of this threshold could generate a further rally to the historical 2011 top in the region of $1,920, while the following key levels to monitor would be the psychological $2,000 mark which led to the historical high in July 2020, at $2,074. Similarly, in case of a new decline, the support zones - where we could expect significant buying volumes - are placed at $1,750 and also in the $1,670-$1,680 region. Much further, we can find $1,620 and the $1,520 - $1,500 area. How to Invest in Gold in 2022? As many investors are looking for the perfect way to invest in gold, it’s important to make an informed choice between options available on the market. What are the differences between physical gold and paper gold and are there any emerging alternatives to these two choices? Paper and Physical Gold - What are the Key Differences? Physical gold has the advantage of tangibility, however paper gold is usually much cheaper in terms of spreads and commissions. Moreover, it is also easier and quicker to buy and sell. Thanks to modern trading platforms, it is possible to purchase and sell paper gold in just a few seconds, profiting from both short and long-term bullion movements. Fully Allocated, Digitalised Physical Gold Conclusively from this analysis, precious metals-backed digital currencies - such as Kinesis KAU & KAG - could represent the perfect solution for modern investors. Kinesis native currencies merge both the enduring value and security of traditional physical gold with the technology-driven liquidity and ease of paper gold. Kinesis offers two tokens: Kinesis gold (KAU) and silver (KAG), which can be easily traded online. At the same time, the precious metals that back them are stored physically in Kinesis vaults and can be redeemed in physical bullion anytime, anywhere around the world. Moreover, Kinesis is paying KAU and KAG holders a recurring monthly, passive yield, which is paid directly into the holder's account in gold and silver. The Kinesis system also offers a sense of immediacy. Holders who store their gold with Kinesis, have the ability to spend, send and transfer their KAU and KAG as digitalised, physical currencies, just like regular cash. To summarise, with Kinesis Money assets, investors can access the benefit of receiving a monthly yield, traditionally associated with bonds, coupled with the potential growth of the physical gold price. Moreover, they can trade Kinesis gold just like paper gold, while also having the option of converting the Kinesis token into physical gold, whenever they wish to do so. https://www.youtube.com/watch?v=Q2ldZFJjii4 Investing in Silver in 2022 It’s not just gold that glitters. In the precious metals environment, silver could also represent an interesting opportunity to diversify an investor’s portfolio. Silver metal is generally more volatile than gold, with wider movements in both directions. In other words, during the positive growth phases, silver can gain more value than gold (in percentage), while falls can also be broader. Many precious metal analysts, including the renowned Robert Kiyosaki, have a positive view of silver. Although its price seems to have been dramatically compressed in the last few years, with the rapid popularisation of physical silver - which is also reflected by the accelerating expansion of silver-focused online communities, such as Reddit-based WallStreetSilver - this could be the right time for the metal to start restoring its real market value. Silver price - from 2019 - 2021 The global physical demand for this precious metal is expected to grow in the future. In the last decade, we have already seen a tremendous increase in the industrial silver demand from the photovoltaic sector. In the upcoming years, analysts have forecasted a huge increase in the request for silver as a component in electric vehicles. Of course, this could have a strong impact on the silver price, increasing the chances that silver can outperform gold in the long run. Gold Vs. Silver Demand It is interesting to analyse the different uses of these two precious metals. Gold is mostly used in jewellery and has a significant component of the demand from central banks and the investment sector. Silver, on the other hand, is more exposed to the industrial demand and this could also represent an interesting point allowing investors to diversify their investment in silver. Both precious metals are equipped with a number of benefits that will make an excellent addition to any investor’s portfolio. However, the decision between gold or silver, as well as the form in which you find them most fitting your personal needs - is entirely up to you. * This article will be updated in line with market trends and advice throughout the year.
This article will define physical and digital gold, outline the respective benefits of each and explore their potential as investment avenues. Gold has often acted as an insurance policy during times of economic crisis, proving itself time and time again as a safe haven for investors. As technology advances, new forms of gold investment have arisen to provide gold bugs with alternatives to traditional physical ownership, including digital gold. What is Digital Gold Investment? Digital gold - or digital gold currency (DGC) - offers investors the ability to own physical gold, with the added benefit of lower costs, and wider accessibility to the everyday investor. Previously, gold was largely inaccessible to the majority of investors, due to its costly storage fees and the complexity of having to physically withdraw the asset from a storage facility, broker, or bank. Investing in digital gold is beneficial for many as, in many cases, there are no additional storage or insurance fees associated with the investment. Moreover, it is predominantly a case of practicality. As digital gold can be transacted across the world, with the vaulting of the underlying metals handled by the trading company. Through regular auditing, investors have the assurance that each unit of digital gold is based 1:1 on physical gold bullion, at all times. If an investor decides to sell, the legal title of the underlying gold bullion is removed from the holder. Benefits of Investing in Digital Gold Some of the benefits of investing in digital gold are: Invest at any level With digital gold, investors can invest as much or as little as they want. There are no restrictions for minimum or maximum investment. Moreover, investors can purchase any quantity of physical gold – starting from just 0.01 gram with Kinesis – and receive a monthly passive yield on their holdings. Liquidate in seconds With digital gold, investors are offered the ability to instantly liquidate their gold, removing the costly and time-consuming process of accessing and selling gold, which investors face with traditional gold investment. With digital gold, it is always possible to spend your gold in a manner that has a utility equal to that of fiat currency - with the added financial security that gold historically maintains value over time. Inexpensive Investment in digital gold can be a cost-effective and efficient way of investing in gold. With no storage fees charged, investors are able to securely store physical gold without the primary expensive of traditional gold investment. Easy Redemption With all reputable providers, the gold bullion bars underpinning digital gold can easily and quickly be redeemed and delivered to the holder. Safe and Secure Investment The physical gold bars underpinning digital gold assets, are often insured and safely secured in vaulted facilities. For example, Kinesis securely stores the gold bars behind Kinesis gold in 13 world-class, fully insured vaults across 9 countries. Tracking of Investment Buying online gives you transparency of market prices and how much gold is on offer. This means investors can also get a better insight into real-time rates so they can take advantage of price movements. With digital gold, exchanges can be utilised to place market orders that line up with their preferred price for gold, allowing for greater tracking of fluctuations. What is Physical Gold Investment? Investing in physical gold has been a safety net for centuries as it has historically maintained its value over time, and due to this, demand has increased consistently. Physical gold can be bought in the form of jewellery, gold coins and bars. Benefits of Physical Gold Investment Some of the benefits of investing in physical gold are: You hold it Some investors, particularly collectors, choose physical gold because it is a tangible asset that they can hold in their hands, or store at home. While this presents certain security risks, some investors still choose this option as a reminder of the literal and symbolic wealth that physical gold still represents. Immediately accessible Some investors enjoy the security of having immediately accessible bullion within their homes. In the unlikely event of an economic failure, some investors prefer to keep their personal gold holdings close to hand. Inheritance Investors can pass on physical gold to relatives as a way to hold wealth within the family unit. This is particularly the case with luxury jewellery, which makes the precious metal a lucrative investment option. Benefits of both digital gold and physical gold: Some of the benefits of investing in physical gold or digital gold are: Inflation-proof Investment Gold is considered to be inflation-proof. This means you can buy gold today and sell in 20 years and still have the same relative value. Since the gold price has historically appreciated alongside rising inflation rates, gold investment has proven to protect individuals from the depreciating effect of monetary expansion policies - otherwise known as overprinting of currency. Due to this, investors often look to buy into gold as a hedge against inflation. Using the example of the US dollar, and contrasting it with gold, the two have often had an inversely correlated relationship. When gold has appreciated, the dollar has consistently depreciated, most notably after the fall of the Bretton Woods Agreement. Historically appreciating value Historically, gold has appreciated over time, and the return is based on price appreciation. If we compare the value of £100 worth of gold and £100 worth of British pounds in the 1980s, the purchasing power of that same £100 worth of gold in 2021 would certainly be stronger than the counterpart of £100 British pounds. Despite holding £100 worth of British pounds and £100 worth of gold, you would purchase less with GBP. Is Digital or Physical Gold the better Investment? When comparing physical and digital gold it is important to consider what’s most important to you as an investor. Digital gold offers superior liquidity, value and security, but some investors will always prefer to have their gold within reach. That said, it’s important to consider that investors can take delivery of the underlying bullion behind their digital gold. As an investor, the Kinesis Monetary system can be used simply to hold gold in storage, meanwhile earning a competitive yield, as well as utilising its fullest capacity as a global, digital currency. In October 2021, the Kinesis Holder’s yield figure was as high as 6.99%*, which competes with, and in many cases outperforms, traditional investment options on the market, such as property, government bonds and dividend-yielding stocks. If you’re looking to build wealth and beat inflation, both physical gold and digital gold could be a good choice. Many gold bugs choose to divide their holdings between digital and physical gold. It is recommended that gold should take up 10-20% of a healthy investment portfolio to ensure investors are protected against market volatility, currency fluctuations and inflation risks. Take a look at how you can invest in Digital Gold today. * with Kinesis between October 2020 - October 2021. Yields will fluctuate based on transaction volume. Please note that past yield figures are not indicative of future figures.
For thousands of years, people have looked to gold as a sound investment and store of value. Today, particularly when the economy is going through a downturn, there is political instability, or the stock market is volatile, many investors start looking to gold as an attractive investment option. If gold isn’t part of your investment strategy, consider your existing portfolio and goals, and whether gold will make a good addition. Not only is gold a good way to diversify your portfolio, but it offers a number of other attractive benefits, including acting as a good hedge against rising prices when inflation accelerates. Understanding your particular investment goals, existing portfolio, returns horizon (short-term or long-term) and need for liquidity should all guide your choice in whether to buy gold and in what form. If gold is the right choice for you, it is important to understand both how gold works and the various ways you can invest in precious metals. For example, you can purchase actual gold (i.e. gold bullion in the form of bars or coins), gold ETFs (exchange-traded funds), shares in gold mining companies, as well as digital gold. To make the most of your gold holdings, make sure you’re making the right choice for your specific needs. Benefits of investing in gold into 2022 No matter what type of gold you choose to hold, there are a number of benefits of investing in gold in both 2022 and beyond. Gold can act as a value safeguard during market dips Many investors view gold as a safe haven during extreme market dips and volatility, helping preserve the value of their wealth. For instance, during the 2007-2008 bear market, the overall stock market plunged dramatically, while gold increased in the same period. Gold can act as an inflation hedge Gold has historically been a sound hedge against inflation because its price tends to rise when the cost of living increases. Moreover, gold is seen as a good store of value, meaning that people may be encouraged to buy gold when they believe that their local currency is losing value due to inflation. Gold offers protection against deflation Deflation is defined as a period in which prices decrease, business activity slows and the economy is burdened by excessive debt. During such periods, many people choose to hoard cash. Historically, some of the easiest ways to hold cash have been in gold and gold coins. Gold is a good choice during times of political uncertainty During times of political uncertainty, many people turn to gold. For this reason, it is often called the "crisis commodity”. Its price often rises when trust and confidence in governments are low. Gold demand is growing Many emerging market economies are growing, with their citizens’ and governments’ wealth increasing, leading to increased demand for gold and a rising gold price. For example, in rapidly-growing China, gold bars are a traditional form of saving, and demand for gold has been steadfast. India is the second-largest gold-consuming nation in the world and has also seen increased gold demand over recent years. Demand for gold has also grown among investors in developed markets. This is reflected not only in holdings of physical gold bullion but in the increasing number of investors in gold ETFs. Gold is good for portfolio diversification Savvy investors understand that a sound investment portfolio is well-diversified, meaning that the underlying assets do not all react the same way to economic and political events. The key to diversification is finding assets that are not closely correlated to one another. Gold has historically had a negative correlation to many stocks and other financial instruments, making it a good way to diversify any investment portfolio. Gold is held by major financial institutions Some investors may wonder whether gold still carries the importance in today's society that it once did. To see that this is true, one need only look at the significant gold holdings on the balance sheets of central banks and other financial organizations, such as the International Monetary Fund. In addition, several central banks have recently added to their gold reserves, evidencing their faith in gold as a sound store of value. Ways to invest in gold There are a number of different ways to invest in gold. Choosing the right type of gold investment is very important, ensuring it aligns with your investment goals and liquidity needs, among other factors. Physical gold Gold can be bought in physical forms such as ingots or coins. Unlike stocks or bonds which may pay periodic dividends, physical gold bullion is not an income-generating asset. Instead, the return on gold is based entirely on price appreciation. Moreover, an investment in gold also carries unique costs, such as storage and insurance. Gold ETFs Gold or silver ETFs (Exchange-traded funds) are trusts that own physical gold and silver, selling their shares that track and reflect the price of gold or silver. However, the investor does not own the precious metals and at no point can they redeem the physical gold or silver bullion. Shares of gold mining stocks For some investors, buying shares of companies that mine gold is their preferred route to tap into gold investing. It is important to note that the value of shares in mining companies are not only influenced by the price of gold, but by internal business-specific factors that relate to the mining company itself. Digital gold For investors who want to tap into the benefits of gold investing, but do not want the hassle of managing physical gold, and desire an alternative to ETFs, digitalised gold may be the right investment. Kinesis gold (KAU) and Kinesis silver (KAG) are digital currencies native to Kinesis, based 1:1 on physical gold and silver. Some of the benefits of investing in digital gold with Kinesis include: Earn a yield: Receive a passive yield on all KAU and KAG held.Get instant access: Buy, sell, and trade digitised physical gold and silver easily.Send globally: Send KAU and KAG globally, cleared in 2-3 seconds.Choose the amount that’s right for you: On the Kinesis Money platform, you can purchase any quantity of spot physical gold – starting from just 0.1 gram. Gold investing in 2022 and beyond Many wise investors will be looking to gold both in 2022 and beyond, as part of their balanced investment portfolios. Before you jump into gold investing, consider all the options available to you and whether they meet your unique investment goals and needs. If you’re looking for an easy and safe way to get started investing in gold, Kinesis Money can set you on the right path.
In recent years, this has been a frequent question for investors. Oftentimes, Bitcoin and gold are pinned against each other, as journalists observe the rally in Bitcoin’s market value, speculating on the future of the two assets. It seems strange to compare gold and Bitcoin when they are in fact two very different financial instruments. As it will be explored further, despite the many similarities that they share, these are far outweighed by their significant differences. On the whole, when observing the potential face-offs between the two in today’s technological environment, the outcome is favourable for precious metals. What is Bitcoin (BTC)? In 2009, Bitcoin was created as an electronic currency which, unlike conventional currencies, came on to the financial market as a decentralised option, eradicating the need for a bank or financial institution to act as an intermediary. Instead, transactions are recorded in a public database, which is then distributed on the Bitcoin blockchain network. The network enables the anonymous, peer-to-peer exchange of virtual coins (or fractions of them), as transactions that cannot be manipulated, duplicated or destroyed. These transactions are broadcast to several computers which act as ‘nodes’ on the global Bitcoin network, to verify the records as accurate. To date, Bitcoin has never been hacked or compromised, because to do so would be extremely difficult, if not impossible. This can be attributed to vast amounts of energy supply needed to power the Bitcoin network, such that one Bitcoin transaction uses nearly the same amount of electricity as a British household in two months. For certain institutions like central banks or governments, the possibility of taking full control of cryptocurrency transfers and transactions is well out of reach. Gold and Bitcoin: What are the differences? Tangibility Gold is a tangible, raw material with even its derivative contracts linked to an underlying value of physical gold that follows the same price valuation trend. Unlike precious metals, virtual or digital currencies have no intrinsic value, rather, they are mechanisms for exchange. For a large proportion of the globe, the value of digital currencies comes from their ability to act as a utility, that can be transferred, transacted and exchanged peer-to-peer. History Gold, as we know it, has been used as a material since antiquity, with its unique properties that have enabled its survival through bloody wars - and even tempestuous market conditions. The other competitor, Bitcoin (and virtual currencies) has been present in human history for just over a decade, leaving much still to be understood about the full extent of their impact on money as we know it today. During this time, Bitcoin has experienced everything from major price growth and subsequent declines, to hacking scandals on compromised crypto wallets. With a backdrop of high volatility and triumphant advertisement from crucial figures like Elon Musk, the future of cryptocurrencies continues to divide and spark opinion. Demand On the whole, the global demand for gold has been relatively stable over time, within even significant variations in the range of 5-10%. Underpinning that stability is the fact that demand comes from different sectors, such as industry and jewellery, in addition to central banks and investors. The relationship between these two sectors is often inversely correlated, such that during an economic crisis, demand from the jewellery and industrial sectors will tend to fall while increasing from the investment sector. In times of economic expansion, the scenario will likely be reversed. The same cannot be said to apply to the cryptocurrency market, which is still in its infancy. Prone to volatility, the value of Bitcoin, as with other cryptocurrencies, moves in extreme cycles that resemble sharp spikes and dips. Market capitalisation Despite its multiple rallies, Bitcoin’s market capitalisation has never come close to that of gold. Speaking of which, it has been estimated by the World Gold Council that gold’s market cap sits at around $10-11 trillion. This figure is around 8 times more than the market capitalisation of Bitcoin and around 5 times more than the entire cryptocurrencies sector. Moreover, even if Bitcoin has a key role to play, the total value of cryptocurrencies is divided between more than 10,000 different e-currencies. This offers a fragmented picture of the cryptocurrency world, making it more difficult to make a comprehensive assessment of the sector. Furthermore, certain cryptocurrencies may cease to exist in the future. It is gold that remains ever-present in the world, even if it is lost, stolen or hard to recover - at the depths of a sunken ship, for example. This too could happen to Bitcoin. At the same time, large quantities of gold are held by individuals as family treasures, with jewels stored privately across the five continents. The World Gold Council has estimated that this gold tucked away amounts to around 90,000 tonnes, effectively reducing its availability on the market by 45%. The similarities between Gold and Bitcoin Finite Supply One possible common feature of gold and Bitcoin though is that supply seems to be finite. The total number of Bitcoins that can be "mined" is equal to 21,000,000 units, which should be mined completely by 2140. About 50% had been mined by 2014, and 75% by 2017. The pace then declined progressively, with energy costs making the activity increasingly uneconomical - regardless of Bitcoin’s market price. Gold’s current global supply is also limited, with known reserves estimated by the World Gold Council at 57,000 tonnes. However, there are two limitations. First, the quantity is finite, secondly, some of that gold is practically impossible to extract, or at least it is not economical to do so at the current market price. For example, consider the gold that is buried under mountains or located underwater in the middle of the oceans. Price Comparison Some similarities have been found analysing the gold rush of 2002-2011 with Bitcoin rallies. From a technical viewpoint, the gold prices jumped from around $250 to a peak of $1,920 in the span of a decade. Bitcoin’s explosion was much quicker and corrections were also much sharper. All this is telling of the crypto market that is just getting started, with significantly higher volatility. In a few words, the possibility of reaching higher returns could be greater. However, as many investors may have already experienced first-hand, the possibility of facing sharp declines or sometimes collapse can be detrimental to a portfolio. Needless to say, Bitcoin is not yet gold and will probably never become like the precious metal. Gold is still widely accepted as the preferred safe haven for investors. Carlo Alberto De Casa is Market Analyst for Kinesis Money. He also writes as a technical analyst for the Italian newspaper La Stampa. Carlo Alberto provides regular commentary for UK outlets including the BBC, Telegraph, the Independent Bloomberg & Reuters. He is also a commentator for CNBC Italy. He worked for Bloomberg as their Equity Research Fundamental Analyst before joining brokerage ActivTrades in 2011 to specialize in currency markets and commodities. In 2014 he published a book on gold and the gold market, followed by a new updated edition in 2018. This report is not an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance.
Find out how gold can now earn a recurring passive monthly yield, making for a lucrative investment. Weighing up the investment options on the financial market can present a dilemma when choosing between the safety of gold, as a traditionally stable asset, and the yield-bearing potential of bonds. Gold vs. Bonds Both bonds and gold are widely considered to be low-risk investments. When speaking of bonds, we are referring to fixed income instruments that represent a loan made by an investor to a borrower eg. government, or corporate bonds. They are often understood as an I.O.U (``I Owe You“- a signed informal notice of an unpaid debt) between a lender and borrower, including details such as the date when the loan will be paid back, and the terms of variable or fixed interest made by the borrower. Of course, the risk is never completely absent from any investment, especially in the short term, where market volatility plays a significant role in manufacturing risk. Bonds have experienced a historic low in their interest rates recently, transforming them into an incredibly cheap investment worth considering. If interest rates do eventually start to climb again, this would offer investors a modest recovery on the yielding potential of their bonds. However, the spot price of bonds that are already in circulation would be hit - particularly those which have the longest maturity. While the outlook for bonds appears gloomy, the future of gold presents itself much more optimistically. Indeed, investors anticipating the long-term benefits of holding gold have rarely been disappointed. Gold experienced a pivotal moment in economic history when president Nixon announced on the 15th of August 1971 that the US would stop trading gold for dollars at the fixed rate of $35 an ounce - otherwise known as the fall of the Bretton Woods Agreement. Fifty years after its collapse, gold has increased in price 50 times over. Bullion Reaching New Heights Bullion reached a historical peak in its pricing of $2,074 an ounce last summer, before slipping back to under $1,800. Despite this, the long term trajectory of gold remains positive, in accordance with our recent market analysis. In contrast, Treasury Yields still seem to be caught in a long-term bearish trend. As inflation rises, the yielding potential, for the majority of bonds in many economic areas, such as the European Union, Switzerland and Japan, is still below zero. The U.S. rate hike forecasts are just as underwhelming, with most Federal Reserve officials expecting the first interest rate increase - only by 1% - in 2023. This means that investing in bonds, with a projected maturity time of one to five years, is generating a negative return or loss for investors who have parked liquidity there. Of course, gold and bonds are likely to appear in the portfolio of any investor, but their roles are very different. Gold has always been a safe haven for investors. Its function, as an asset that protects wealth, will become even more effective if the markets experience uncertainty and crisis. With a focus on stocks, which have skyrocketed over the past 15 months, investors can expect to observe the turbulent lows and highs of the market. Just since the low of the Covid-19 pandemic, the S&P 500 (a stock market index tracking 500 publicly traded domestic US companies) has already doubled in value to the current state. It seems that sooner or later, there will be new corrections as the market responds to the dramatic shifts and changes, making gold the safest store of value for every investor. Earning a Yield on Gold As opposed to bonds, Kinesis gold (KAU) and silver (KAG) offer investors a recurring and reliable monthly yield, paid directly into their Kinesis accounts - for life. Rather than waiting to utilise their investment, as is the case when awaiting bond maturity, participants of the Kinesis system experience a sense of immediacy, with the ability to spend, send and transfer their KAU and KAG as physical-digital currencies, just like regular cash. By holding Kinesis gold and silver, investors can access the yield-bearing benefits, traditionally associated with bonds, coupled with the appreciating value of gold as a stable asset. In other words, the best of both worlds. Not to mention, on October 6th 2021, Kinesis paid out a 6.99%* annual yield on gold that competes with and, in many cases, outperforms traditional investment options in the market like property, bonds, bank deposits, and dividend-yielding stocks. Find out more about the yielding potential of gold. KINESIS YIELD *Yields will fluctuate based on transaction volume. Please note that past annual yield figures, taken from Kinesis’ Holder’s Yield, October 6th 2020 - October 6th 2021, are not indicative of future figures. Carlo Alberto De Casa is an external Market Analyst for Kinesis Money. He also writes as a technical analyst for the Italian newspaper La Stampa. Carlo Alberto provides regular commentary for UK outlets including the BBC, Telegraph, the Independent Bloomberg & Reuters. He is also a commentator for CNBC Italy. He worked for Bloomberg as their Equity Research Fundamental Analyst before joining brokerage ActivTrades in 2011 to specialize in currency markets and commodities. In 2014 he published a book on gold and the gold market, followed by a new updated edition in 2018. This report is not an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance.
What is gold-backed crypto? In its simplest form, a cryptocurrency backed by gold or silver is the modern evolution of the gold standard: that is, a monetary system where a currency is directly linked to physical precious metal. Coins or tokens issued that follow this system provide token holders with digital assets that have a value directly correlated to the physical assets they represent; gold or silver. To go into more depth, gold or silver-backed crypto regulates its worth by having a direct, stable link with a trusted asset - gold - thus avoiding what many risk-averse experts see as one of crypto’s shortcomings - its lack of intrinsic value, which results in high price volatility. Stablecoins (cryptocurrencies whose value is tied to outside assets) that use these physical assets can therefore enjoy more tangibility and more predictable price swings, compared to their fully digital counterparts. As a result, their price will never drop below the price of a precious metal that backs them, though the value of the token can increase in tandem with the underlying physical asset, providing both stability and the potential for profit. The history of money backed by gold To fully understand the benefits of gold-backed currency, it’s important to understand the idea behind linking currencies to precious metals and how it played out historically. First introduced by the United Kingdom in 1861, fixed-rate gold-backed currency came about to help stabilise an economy that was gradually becoming more and more global. Gold has always been an important resource for central banks and governments to hold, so tying a nation’s currency to its gold reserves was a way of ensuring that trade was always at a surplus. The United States followed suit in 1879, and until 1933 the US dollar was backed by gold. Why did this change? In part, following the First World War and the Great Depression in the 1930s, people began to hoard gold supplies. Governments also realised that it was difficult to aggregate resources based only on their reserves, so the system was changed to the current trust-based system that we see globally today. As a result, currencies were decoupled from gold and silver, and the value began to fluctuate more wildly as it was based on intangible promises, not unlike today’s modern cryptocurrency. Throughout this, gold remained as valuable in the eyes of traders as it always had been. Investors kept investing in gold, and as a more stable option than many global currencies, it’s now a sought-after asset for the astute. Translating the gold standard into the modern day Though the US dropped the gold standard fully in 1971, the idea behind linking money to something that’s truly valuable remains a solid financial strategy. With blockchain technology connecting commerce like never before, it was only a matter of time before cryptocurrency enthusiasts linked this new fintech revolution with a stable, trusted asset. By digitising the timeless value of gold into a spendable currency, Kinesis worked on our blueprint to integrate the stability of precious metals with the convenience of modern finance. This gives holders all the reliable store of value offered by gold, and all the ease of use you expect from a more modern, fluid asset. What is the benefit of currency backed by gold? The benefits of gold-backed crypto are numerous and are largely linked to its stability compared to other options like Bitcoin or the Ethereum blockchain. We’ve listed a few of the most commonly cited benefits below: It’s a stable option As mentioned, a legitimate gold-backed cryptocurrency enjoys a higher level of market stability than its more volatile counterparts. This is because it’s intrinsically linked to the current gold price, which is largely one of the most stable markets around. Historically, everyone wants precious metals, and so a coin linked to those metals is bound to retain its value as long as it’s associated with these materials. It’s easier to understand the market Tied to this stability, the price fluctuations of gold-backed crypto as a whole, are easier to understand. Many of the market variations of Bitcoin and other crypto tokens can seem random, even arbitrary. However, with these stablecoins, you can look at the daily gold market and see trends, changes and predictions that will help to make informed investment decisions. Cryptocurrency is easy to store Unless you have a Swiss vault (or several) to hand, it’s not easy to store large volumes of gold on an individual level. Digitalised gold and silver allows investors to take advantage of its value for trading, investing and spending without worrying about its physical location at all times. This can translate to lower fees for using it as a trading asset, leading to greater convenience and profit. You can access blockchain trading apps By tokenising gold and silver into digital assets, holders can access blockchain trading platforms and all of their associated benefits with a tangible asset value behind them. These platforms offer easy trading, strict security credentials and the transparency of the blockchain as well as their safety regulations. It avoids central bankers and, thus, banks Through the blockchain trading methods mentioned above, investors can transfer value without having to go to a bank. This is beneficial in various ways: it’s faster, it’s more accessible, and it allows you to avoid the fluctuations that can happen when you trade money globally. In short, it’s a good way to beat a bad exchange rate. All that glitters is not gold... The drawbacks of gold-backed crypto There are, however, aspects of some gold-backed crypto that still show room for improvement. Although digitalised precious metals are, by default, superior when compared to fiat or traditional physical bullion assets, in most cases they do not offer anything beyond a combination of what crypto or precious metals are offering already. Lack of yield Traditionally, the lack of yield and therefore limited earning opportunities on the vast majority of gold-backed crypto, result in other assets, like stocks paying dividends, bonds or rental properties, appearing as a more attractive prospect for investors. Nowadays, we can see an increase in the public awareness of the inflationary risks associated with long-term capital holding, which means that investors will look even more consciously for the assets with the highest earnings potential. As negative interest rates have become normalised, people are scouring for a solution that will not require them to – counterintuitively – spend extra money in order to keep their money stored with a bank. Gresham’s Law Another stumbling block is what’s known as Gresham’s law – bad money drives out good money. In practice, this means that people hold onto their gold and silver (good money) and spend paper fiat (bad money), despite their remarkably increased liquidity (and thus, spendability) obtained in the process of digitalisation. Kinesis Yield on digitalised gold and silver Kinesis solves both these problems. By presenting a passive Holder’s yield on digitalised gold and silver, Kinesis allows its users to earn money, simply by holding their assets. The Kinesis Yield system not only takes gold-backed crypto a leap further, but simultaneously stimulates the organic growth of a monetary system in which its users are rewarded for their participation, not penalised. Moreover, a yield on gold and silver, which can be earned by holding, sending or trading, incentivises spending and defeats Gresham’s Law as a consequence. Back to the Gold Standard In the wake of the 50th anniversary of the Bretton Woods Agreement collapse (which ended the role of gold as a unified fixed exchange rate dollar-stabilising mechanism), the necessity of re-visiting the policy of a store of value as a currency price determinant appears more self-evident than ever. This necessity, coupled with global digitalisation, is already enabling us to bring back gold and silver as money, once again. Putting gold on the blockchain, a kind of 21st-century alchemy, transmutes it into a spendable asset, with the potential of broadening its reach across the globe. Society seems to be craving the financial stability that gold-backed currency can unquestionably deliver. As The New Case for Gold book author, Jim Rickards explains, while sharing his insight on what a new Bretton Woods System would look like, the solution is already here. A gold-backed currency, with underlying gold securely stored in a vault and available to spend at the tap of a button, is already available through the Kinesis Monetary System. If you’re convinced by the many benefits of this stablecoin and want to start trading in gold-backed crypto, you should know that it offers more than just a reliable asset. With a rising market cap and surging demand since the beginning of 2020, it’s increasingly looking like the go-to option to combine convenience and stability in the blockchain world.
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