{"id":285,"date":"2006-05-04T01:10:35","date_gmt":"2006-05-04T01:10:35","guid":{"rendered":"http:\/\/www.intmath.com\/blog\/?p=285"},"modified":"2019-07-08T10:19:22","modified_gmt":"2019-07-08T02:19:22","slug":"gold-future-insurance","status":"publish","type":"post","link":"https:\/\/www.intmath.com\/blog\/mathematics\/gold-future-insurance-285","title":{"rendered":"Gold - future insurance?"},"content":{"rendered":"

I have been following the rapid increase in the cost of gold for some time now. I devoted a section to it in Interactive Mathematics: Gold Rush?<\/a>. <\/p>\n

A lot of the increase is speculative (traders are pushing it up in the hope of making a quick buck) but there are fundamental reasons why gold is worth considering as a hedge against future financial meltdown (consider the enormous deficits that the US currently has - and what will happen if Asia or the Middle East suddenly decides, or needs, to sell their billions of dollars worth of bonds). <\/p>\n

One of the newsletters on gold that I get (from BullionVault) has this interesting thought-piece on how financial markets work today:<\/p>\n

\n

Banks, pension savings, mortgage guarantors and all the major financial institutions on which we depend are now tied up in a web of undelivered assets. A is the registered owner of a bond payable by B, the principal on which has been credit-swapped out to C. The terms are controlled by a deed drafted by an investment bank D, which itself receives the interest, which has been aggregated with 30 others and sold notionally to E. E is foreign, and flattens the FX risk with a bank F, who sells and rolls a future on his long currency book, which is bought by another bank for an assured profit by running the position against a higher yield bond bought from a junk-status borrowing customer, which has been insured against the risk of default with G, a major insurer, who happens also to be A.<\/p>\n<\/blockquote>\n

This is part of their sales pitch for wanting us to buy physical gold - because that's where the buck stops.<\/p>\n

In 2001, gold was at $250 an ounce. Today as I write (4 May 2006) it is the biblical $666.<\/p>\n

As you read this, the price now is:<\/p>\n


\n\"[Most<\/A><\/p>\n

See the 1 Comment<\/a> below.<\/p>\n","protected":false},"excerpt":{"rendered":"

I have been following the rapid increase in the cost of gold for some time now. It has more than doubled since 2001.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":""},"categories":[4],"tags":[],"_links":{"self":[{"href":"https:\/\/www.intmath.com\/blog\/wp-json\/wp\/v2\/posts\/285"}],"collection":[{"href":"https:\/\/www.intmath.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.intmath.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.intmath.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.intmath.com\/blog\/wp-json\/wp\/v2\/comments?post=285"}],"version-history":[{"count":1,"href":"https:\/\/www.intmath.com\/blog\/wp-json\/wp\/v2\/posts\/285\/revisions"}],"predecessor-version":[{"id":12058,"href":"https:\/\/www.intmath.com\/blog\/wp-json\/wp\/v2\/posts\/285\/revisions\/12058"}],"wp:attachment":[{"href":"https:\/\/www.intmath.com\/blog\/wp-json\/wp\/v2\/media?parent=285"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.intmath.com\/blog\/wp-json\/wp\/v2\/categories?post=285"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.intmath.com\/blog\/wp-json\/wp\/v2\/tags?post=285"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}