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🧈 Gold is Money... everything else is Credit!
City Chad
December 26, 2023
Yes, once again this is the CityChad, that internal voice in your head keeping you sane in a world ruled by clowns. Let's start grinding!
In this week’s edition:
Markets: 🎅 Xmas Rally & Solana Pump
Article: 🧈 Gold is Money... everything else is Credit!
News: 🛢️ Houthi rebels might cause oil prices to uptrend
Chad Of The Week: ⚔️ Alexander the Great
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MARKETS: 🎅 XMAS RALLY & SOLANA PUMP
Xmas came early for investors… Last week all asset classes climbed up.
Why was that?
Well, the FED seems to not only be unwilling to raise rates, but could actually end up lowering them.
Crypto had another whopper of a week. Bitcoin and Ethereum (part of the Chad index) kept printing gains almost daily.
But the story of the week has to be Solana. The Ethereum competitor has soared almost 900% in the last 12 months.
It even passed BNB (Binance’s token) to become the 4th largest cryptocurrency. And it is still far from its $260 All Time High.
There are a bunch of reasons behind this. The growth in network users being a huge one.
This was not in my bingo card for 2023 to be honest. Especially after the SBF debacle and the fact he owned so much of this token.
This altcoin was once mockingly referred to as “Soylana” (i.e. the Soy Boy favorite).
Not any more…
If things keep going like this maybe it will have to be added to the “Chad Index”!
ARTICLE: 🧈 GOLD IS MONEY... EVERYTHING ELSE IS CREDIT!
Shiny, shiny, shiny
TLDR: Investing in companies with solid fundamentals has been a proven way to grow your wealth in the long-term. Just look at Warren Buffet’s track record. All that sweet growth is great, but what about the downside? Safeguarding some of your wealth in stores of value can be a sound move. Even the best quality companies can be susceptible to black-swan events outside of their control. When markets are uncertain “safe haven” assets like gold usually go up in price while stocks and other financial instruments are prone to dwindle.
🧈 The Worth of Gold
👨🏫 The Historical Element
👍 When does Gold Thrive?
👎 When to Avoid it?
🤔 How to get Gold?
😎 The Chad Takeaway
🧈 The Worth of Gold
“Gold is money... Everything else is credit.”
Those are the wise words of John Pierpont Morgan during his famous 1912 declaration before the US Congress.
Trying to hide his rare middle name he went by his initials "J. P.".
Oh and he also happened to found one of the biggest financial institutions in the world: J.P. Morgan.
Fast forward to today and those words are as true then as they are now.
Fiercely guarded by emperors, kings, (and nowadays) bankers and investors. It’s the precious metal with the unique quality of never decaying or corroding.
So what has made so many men throughout history dive into uncharted waters, invade enemy lands, or even raid cursed temples like Indiana Jones to get it?
Let’s dive right in.
👨🏫 The Historical Element
Gold has been accepted as a method of payment and a store of value since people started using money.
Almost every civilization on the planet has traded using gold coins.
Heck, even every fantasy RPG has its "Gold Dragons" or "Golden Crowns".
Gold has definitely resisted the test of time. And you can argue it has value because people have always believed it has value.
Sounds like circular logic, right? But that’s how we humas operate.
But that is not the whole story. Gold is is also considered valuable because of its beauty, physical properties and scarcity.
It has been interlinked to money ever since money was a thing…
And even until 1971 the US Dollar was pegged to the price of Gold! It was set at 35 USD per ounce.
But the turmoil of the US economy in the ‘70s forced President Richard Nixon to axe the pegging.
And once again the precious metal became free to rise in price against the now “fiat” currency.
Some consider this to be a tragedy for various reasons. But we digress so we will cover that another time.
👍 When does Gold Thrive?
Looking at historical charts, gold prices start to spread their wings when unexpected events happen. Like catastrophes or wars.
These conflicts generate uncertainty and lure investors and Chads into securing their positions.
Gold “guarantees” a tangible valuable asset in the face of not-so-clear circumstances for other financial instruments.
This increase in demand forces Gold’s value up: the mining of gold is limited per year and cannot easily satisfy a surge of new buyers.
👎 When to Avoid it?
Gold prices tend to be quiet or even decrease during prosperous times.
Favorable times bring certainty. This encourages investors to drop safer assets like gold and venture into riskier ventures.
And as you can expect, investing in gold for profit requires a good understanding of macroeconomic events and even international politics.
If you can foresee a military conflict or a major crisis, shifting some of your portfolio to gold might be an excellent choice.
Gold may very well move in opposition or independently of your other assets and investments.
Buying it for stability might help you cover your losses in the face of unexpected conflicts.
🤔 How to get Gold?
There are two main options to access gold.
The first one is simply to contact a gold-broker and just physically possess it. Your bank may even offer that option.
Gold can be sold in ingots, tablets or coins. You’re more likely to buy them in the latter form unless you are a Giga Chad.
The downside to this is that you may find it harder to sell it back at the same price you bought it. Also you may lose the damn thing!
The second option can offer you a better way of liquidating your position fast if you need to.
This is to buy a gold-backed security like an ETF. This is what we have put on the Chad Index.
These are basically trading like stocks in the stock market. But instead of representing shares in a company they are shares in a pool of physical gold.
The downside to this is that you are relying on a counterparty to run the ETF. It is normally safe but the risk is never 0.
Finally you can also access indirectly the price movement of gold by allocating some of your investment portfolio to gold-mining companies.
As a rule of thumb, when gold prices rise so do the profits of gold-mining companies. But this correlation is not perfect.
😎 The Chad Takeaway
Gold may seem like a poor investment as it may not provide you with the growth benefits a stock might accrue over the long term.
However allocating some of your portfolio to this commodity can be an excellent hedge against macro risk and inflation.
Remember that the price of Gold can often move inversely to your other assets. This can be a good thing when the thing hits the fan.
And who doesn’t like a bit of bling around them anyway?
Do not try this at home
NEWS: 🛢️ HOUTHI REBELS MIGHT CAUSE OIL PRICES TO UPTREND
BP (British Petroleum) has taken the same action as other freight companies such as Maersk, MSC and Hapag-Lloyd:
Stopping their shipments through the utmost important Red Sea.
The Red Sea has been a massive chokepoint of international trade, with over 10% of international trade crossing the Suez Canal.
However, its waters have now been contested and undermined by Houthi rebellious groups in Yemen.
Houthis have increased their influence in the area since the start of the Israel-Hamas war.
They have been using anti-ship missiles and drones to harass any potential trade that could land in Israeli ports, specifically barricading the Bab al-Mandab Strait.
It would be expected that commodities such as oil will continue to rise in price should supply continue to be disrupted.
Companies will be forced to undergo almost 10 extra days of navigation, bordering around Africa. Probably stopping by in the Cape of Good Hope.
Definitely an event to keep an eye on, since even though Houthis won't be able to block the Red Sea, the attacks have been serious enough to browbeat shipping giants.
CHAD OF THE WEEK: ⚔️ ALEXANDER THE GREAT
Let’s be real. The man is called “the Great”.
Perhaps the Chad of all Chads? This week we pay homage to the one and only Alexander the Great.
Not many people in history have “The Great” attached to their names. And this was not just some random historical whim. The title was well deserved to say the least as you should know.
Alexander was born in 336 BC and his short ruling of 13 years was enough to build one of the biggest empires in the world.
And it would be impossible to detail in such a brief space all the things that made him Great. But we shall instead talk about one of the lessons all aspiring Chads can take from him. Let’s go.
Young Alexander didn’t have an easy going.
His father Philip was assassinated during a turbulent period of time where Greek city-states were in constant fighting.
Now, one of the challenges he faced was how he dealt with the treacherous Thebans.
The Thebans, long vassals of the Macedonian Kingdom, were ready to conspire when they wrongly thought that Alexander was killed in battle.
They proceeded to not only lynch and murder Macedonian traders and officers, but quickly rallied behind Persian funds to declare themselves independent from Alexander.
Of course, Alexander was “the Great”, not “the Oh well…”
He marched his army across over 500 kilometers in less than ten days to show himself to the deceitful Thebans.
Unlike other famous battles, like Issus or Gaugamela, Alexander almost doubled the defending Theban army, and swiftly executed 6000 Theban soldiers, before selling the remaining 30.000 citizens to slavery.
The city of Thebes was obliterated and erased from the face of the earth.
Noy you may say, this was all a bit harsh. And how can this apply to me in 2023?
Well, Alexander sent a powerful and resonating message. He was the head honcho of the Greek peninsula, and whoever thought otherwise would end up facing the consequences.
Creating a reputation for yourself (good or bad) can really have impactful long term consequences for you (also good or bad).
Sending a strong message of your character should be an intentional act in all that you do. Make sure it is the message you want others to hear.
People are always listening to your actions, not just your words. Whether you want to or not. Give them something Great to talk about!
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🧔♂️ CHAD MEME
DISCLAIMER
The material on this email and our website is for informational and entertainment purposes only and we make no guarantees as to the accuracy or completeness of its content – it is subject to change. Please conduct your own due diligence and research.
None of this information is financial advice, and you should consult your financial advisor before making any investment decisions. Your capital is at risk and you may lose more than you initially invested. We do not provide any offer or solicitation to buy or sell any investment products, nor does this constitute an offer to provide investment advisory services.
The Chad index (“the index”) is a combination of historical returns for the following assets:
Equities: Vanguard FTSE All-World UCITS ETF USD Acc
Fixed Income: iShares Core Gl Aggregate Bd UCITS ETF USD Hgd Acc
Real Estate: iShares Developed Markets Property Yield UCITS ETF USD (Acc)
Gold: Gold Bullion Securities Limited
Ethereum
Bitcoin
The index is rebalanced quarterly to the target weights shown in the table. The target weights are subject to change. The index does not represent the performance of a real portfolio and does not imply a recommendation to invest in any of those assets. Past performance is not an indication of future performance.
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