Gold has fallen 13% since Black Monday amid market turmoil across the globe that sees Germany the latest to shut down.
Ahead of it queues are apparently forming at gold shops, but this mini surge in demand probably pales in comparison to the week/s long closure in Italy, and now in France, and imminently in Germany, as well as some US states.
In London, where a spike in cases is expected in a ratcheting up to the peak, life appears generally normal, with very old people out there in the streets, as well as all other age groups.
The British government however is passing laws to give them significant powers, including unlimited powers for the Chancellor to do ‘whatever it takes.’
Thus all expect things to begin changing in London too, with potentially a near total shut down in the second week of April.
That means people might be asked to not go out at all, even for work, which is what they are being asked in Italy currently.
Unless it is necessary for them to go out of course, and arguably buying gold is not quite a necessity when you can buy bitcoin online from home.
The safe haven asset is not looking like safe or a haven anymore, with it falling less than stocks but still falling since Black Monday on March the 9th when Italy locked down Milan.
Gold is not such a safe haven asset now probably because this is not a banking crises, hence at least for now there is no extra need for a means of exchange outside of the banking system, a need gold provides physically and bitcoin does digitally.
Instead this is an economic crisis, a very different beast which we have not seen in our lifetime, even the queen’s lifetime.
So everything is falling in value probably because we are entering a period of deflation. Money literally is being burned because people are not borrowing, so new money is not being created.
As fiat, seemingly a German word which translates to hype, is decreasing instead of increasing in amounts as suddenly it is less needed for commerce because there is less commerce, the value of fiat arguably increases, at least temporarily, thus the value of everything else, even gold, decreases, for now.
For now because banks could potentially get in trouble if people start defaulting, with govs perhaps buying off the loans to basically cancel them so that neither the bank nor the borrower is affected, but now gov is affected because this becomes their debt.
Here is the bit where Trump shouts at Fed and basically says gib muneh you… which would be fine maybe at low levels but it can easily get out of hand if not careful in managing the value of money as measured by the value of assets.
Currently money is very valuable and in the abstract that’s not good, but as it can’t currently facilitate exchange at the same level it could before Black Monday, there is arguably not much you can do about it as arguably the value of money is derived from the value of an exchange.
If there are more exchanges then money would be valued less, if few exchanges however, because the exchanges are rare money too is rare.
To make money less rare you can just flood it, but unless it is accompanied by a rise in exchanges, it probably won’t change anything.
So it might perhaps make more sense to use money to ‘cancel’ obligations that derive from an ordinary level of exchanges.
Meaning for example if someone was earning $2,000 a month before Black Monday and now is not working, he or she should just be given $2,000 for this temporary period to continue covering rent, bills, etc.
Likewise if a company is still paying them even though they are not working, the company should be given in full the amount they paid.
Analyzing who is getting what however is a very complex thing, so America’s approach of just giving everyone $1,000 probably makes more sense, and it would probably be one way of preventing a deflationary spiral.
However although it might be fine as a first and a quick response, a more sophisticated approach would probably be needed to basically try and monetarily cancel two months of economic activity.
Not least because you’d have to take into account things like you can’t buy physical gold currently, or soon for most places, but you can buy bitcoin as that’s a computer thing that doesn’t need to close.
Yet bitcoin is not faring very well currently, as you’d expect really because international trade has collapsed and bitcoin is probably being used in such international trade.
Nothing is faring very well currently, probably because this is now the beginning of a depression.