Gold and USDT: What 2019 Has Brought
2019 is ending on a positive note. From a financial standpoint, everything that could have grown has done so: stocks, commodities, precious metals, futures, and all sorts of risky assets. Even Bitcoin, in spite of the negative results in the last six months of the year, has shown an overall growth of over 120%.
But what about gold? The price of the precious metal has increased by 18% this year. Such an aspect is particularly interesting, granted that the US stock market has been growing for 10 years straight (this hasn’t happened for a long time). Gold is considered a hedging asset, and it usually sees an influx of capitals when the stock market goes through a downturn. Why? That's easy: in times of crisis, investors sell their stocks and are left with lots of cash on their hands – and nowhere to invest that cash. The most logical way to get rid of this money is to purchase gold, thus leading to an increase in demand.
This is all theory, however. The markets keep changing all the time. Just think of the current situation. In the past 10 years, while the US stock market kept on growing inexorably, the price of gold doubled. More so, it has increased fivefold since the start of the new century, or in the past 19 years. These aspects point to a new trend: gold seems to grow faster and faster – even when there's no crisis in sight.
Why is this happening? Well, there is more and more free money in the world – and less and less free market niches with low competition. Market players are unwilling to invest in highly competitive markets, given the low profit potential. At the same time, the worldwide middle class is actively expanding, especially in Asia.
By contrast, the amount of gold isn't really growing. Sure, it's being mined (though the amount extracted every year is rather low). At the same time, some of it exits circulation forever – as it is either lost or utilized in specific industries. A larger amount of gold settles down in vaults belonging to central banks, in private safe boxes, or on the necks, hands, and ears of Indian buyers :). This should explain the constant growth of the gold price, since the demand outstrips the supply.
What about USDT? Investors who chose to store their capital in this digital currency have become 18% poorer in the gold equivalent. As such, many people wonder what will happen in 2020. Will the price of GOLD keep growing? Nobody knows, and market forecasts are often wrong.
As such, it is best to try and reason logically. 2020 will be marked by a further easing of the monetary policy in several leading countries. The US, EU, and Japan will keep on printing money, with smaller economies following suit. Moreover, the Federal Reserve may lower the interest rates again. These aspects will likely generate even more free and unbacked money in the economy.
If the long-awaited global recession finally begins (pessimists have been expecting it since 2009), central banks will print massive amounts of money to try and extinguish the fast-spreading fire.
What will this mean for the price of gold? Will it fall by 20% or grow by 20%? We would bet on the latter. As such, this means that USDT investors will once again lose 20% of their capital in gold equivalent.
So what should you do? The answer is simple: buy GOLD tokens, since they are 100% pegged to the price of gold. Buy – and then watch as those who have invested in fiat-pegged stablecoins lose more and more of their capital to inflation.
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