GOLD'S ROBUST YIELD

 

The stock jockey rationale against gold is that it has no yield.

This is a misunderstanding of yield.

A financial yield is the income an investment generates over a period of time.  Gold's current yield this year is 25 percent.  Last year it was 27 percent.  That's pretty good.

A 10 year treasury yields about 4.5 percent and is trending higher so the price of this invesment is trending lower.

In a booming economy that yield might be indicative of economic health and might signal less of the need for gold - especially if the debt situation was well under control

In an economy that is currently growing beneath the 1 percent trend growth - this yield is indicative of debt market that is nervous - perhaps frightened about the health of the underlying currency.  Especially when the debt has exploded to 125 percent of GDP and is trending rapidly upwards.

Then the 4.5 percent yield (trending higher) is indicative of a powerful need for Gold as a hedge against debt and currency instability.

Because that's what gold is: AN INSTABILITY HEDGE.  In debt crisis gold is the only monetary hedge.  And make no mistake, by massively increasing our debt (the big burdensome bill) and incentivizing other countries to dump our debt (that is what Tarrifs do when you have the reserve currency, and that's math not opinion) we are rushing head first into a debt crisis.

Throw in a chaotic trade war that has already destabilized the global economy and you have a global rush out of US debt and into GOLD.  

To be sure, gold has appreciated 8 percent a year since 2000 while stocks have appreciated 7 percent.  

But with stocks trading a record multiples and the stock mania at all time highs (as measured by the VIX and by the percentage of stocks that make up the net worth of the US invsestor) while US and Global GDP are trending down towards zero with Global Debt at 300 percent of global GDP, and you have a recipe for massive financial instability wherein the gold price can only move upwards both in real and relative terms.

And with gold currently returning about 25 percent - that seems like a worthwhile yield - as a reward for moving into the ultimate safe haven investment.