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Comment by aidenn0 | Hacker News Reader

Right now assets valuations are sustained at least partly because the wealthy still have wealth to inveset and There Is No Alternative(TINA).

If you don't buy stocks, bonds or real-estate, the only other option is to hold cash. Holding very large amounts of cash can be inconvenient for various reasons. Gold is often proposed as an alternative, but it's value is already quite high, and it's an inflation hedge, while recessions tend to be deflationary.

The fact that the majority of US taxpayers got a big check, and are expected to get a second one soon is also a boost to the economy. However, mortgage delinquencies more than doubled this past quarter, so we are getting close to the point where foreclosures will happen, which will lower the prices of real-estate.

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It's still sort of hard for me to believe after all the growing inequality how much things have truly bifurcated in the past 6 months. A huge chunk of the country is broke, and their extra unemployment money and govt bonus checks are going to those that already own lots of assets (e.g. landlords, mortgage holders, Amazon, etc.) while people with stable jobs that hold assets are essentially getting richer.

I just don't see how this ends well, for the economy or society.

I really fear we're getting close to a breaking point. The absurdity of a market hitting all-time highs while unemployment figures are in the tens of millions isn't lost on the broke and the unemployed.

The value of hard assets like real estate has to be tied to the money supply to some extent.

I can understand that CPI inflation is not directly tied to money printing, partly because both the velocity of money and the demand for consumption items are dropping right now, but simple accounting would dictate that this money still end up somewhere. I can only see it bidding up hard assets, again because TINA, and because money tends to flow upward rather than trickle down if left to itself.

The Fed is working quite hard to make sure this isn't deflationary.

Gold investors (like myself) assume that The Fed can only stimulate further in order to stave off deflation...but (crucially) with no hope of raising rates later, even in the face of the inevitable resulting inflation.

A rise in rates would simply crater everyone who has come along with The Fed so far - virtually all consumers and corporations holding high levels of debt. In such an environment of obvious inflation and Fed paralysis, gold could go much, much higher.

The Fed is paralyzed in both directions though. They can't really lower the rates much either. Obviously the fact that you hold a lot of gold and I hold little gold tells a lot about which direction we think is going to matter, at least in the medium term.

How do you invest in gold?

I don't know how GP does, but if you don't trust certificates:

https://www.jmbullion.com/kilo-pamp-suisse-gold-cast-bar/

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