How Covid 19 has affected the stockmarkets, and what it might do to gold

Back in the Roman Empire, 1oz of gold would buy you one Roman tunic and a pair of Roman sandals. On March 31st 2020 1oz of gold was worth €1,450 and will buy you a bespoke Italian suit (c. €1,000) and Italian shoes (c. €500). This example shows that the passing of two Millennia could not separate Gold from its PPP (Purchasing Power Parity) proving it to be an excellent hedge against inflation and means for wealth preservation.

Havoc has been wreaked on the global stock markets since the advent of Covid 19 and logic would dictate that the price of gold would rise at least in the short term; which it has however we could not have predicted the recent events which have caused a global paradigm shift in terms the disruption to the global supply chain and the spawning of the concept of social distancing which is increasingly fuelled by the fear of Covid 19. Gold rose sharply and tapered back off again over the past week. But why?

London, for example holds a large percentage of the worlds gold reserve in the Bank of England and the Coronavirus has had a big role to play in the disruption in supply of gold and hence negatively affecting its price per ounce. Last week Gold dropped over €100 per ounce having sharply risen after the Bear ate the Bull in the global stock markets.

Yesterday for example it was announced that gold mining operations in the Philippines will resume with immediate effect with some mines having been shut down for 1 full week. This has led to another short term increase in the price of gold and restored at least some confidence in gold. A shut down of this nature was previously unconceivable. It is clear that the global reaction to the pandemic as portrayed by our media has been somewhat cannibalistic in the sense that we are sacrificing our businesses, livelihoods, economies, supply chains liberty and quality of life for fear of a relatively unknown quantity.

We have not acquired nearly enough data derived over a time period long enough to make an informed decision as to what course of medicine our experts prescribe to combat the spread of the virus. This brings into question whether gold can continue to serve us as a trusted store of value and means of wealth preservation as we continue to spiral uncontrollably into the 21st century.

What if Covid 19 seasons rares its ugly head again in 2021 – will we take cover in the safety our individual cells, undergo another ‘economic correction’ and undermine supply chains to the detriment of the western civilisations trusted store of wealth? Have we seen a ghost?

We are in a way lucky that that this epidemic has occurred in the year 2020 and not 2000. Let me explain…

The first code was written back in 2009 to build a Distrusted ledger or ‘Blockchain’. Blockchain was the underlying technology behind Bitcoin. This revolutionary technology was begotten from the financial crisis of 2008 and the financial burden it bore on taxpayers globally. The apparent aim was to offer citizens an alternative money supply and store of value by using the distributed ledger technology underlying Bitcoin to offer citizens a safe haven from any potential tyrannical centralised legislators.

The financial institution of the world had used too much leverage and became no more than gamblers or speculators and the certainly played their role in bringing about the financial crash. After the bailouts that followed the crash the world’s Central Banks reacted to the crisis by implementing over ten years of Quantitative Easing (financialised jargon for printing money and dropping interest rates to near or below negative to stimulate the economy and essentially lower our debts through artificial inflation).

In hindsight it can be successfully argued that Quantitative Easing ONLY operated as a sticking plaster over the wounds of 2008. Bitcoin and other cryptocurrencies are not subject to insane financial policy or financial tyranny as outlined above as there is a maximum number of Bitcoins available – 21 Million. Quantitative Easing is not an option for cryptocurrencies like Bitcoin!

We have a feral virus with tentacles pervading every aspect of our life and every country on earth. If we were faced in the same situation in the year 2000 we would have not had the opportunity Blockchain and distributed ledger technologies offer. In 2020, Blockchain proves that we have the ability to re design the mechanics of our supply chains, economies and currencies.

Blockchain are all about decentralising trust. In times that we cannot trust our monetary system or our centralised powers and with gold being exposed as a more uncertain method of wealth preservation then Blockchains seem to offer the safest and most trusting means to ensure financial stability and individual liberty in a world of social credit scores, social distancing, cashless societies and crumbling empires.

By Barry McCarthy, who is an experienced Recruiter with 10 years of experience in the Ireland and the Middle East. I specialize in assisting Data Driven companies, High Frequency Trading Firms, Fund Managers, Investment Banks, Legal and Software Solutions Firms with their IT and financial recruitment needs in the Irish and Middle Eastern markets. I am a serial Intrapreneur and I specialize in building IT Recruitment teams in start-up environments.

https://www.linkedin.com/in/barrymccarthyrecruiter/

https://www.madisonpearl.com/

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