Weekly Digest: Central Banks Love Gold, China’s Crackdown
07/07/21: WisdomTree sees gold and stocks as the best hedge against long-term inflation, China expands its crackdown on tech platforms, central banks regain appetite for buying gold. And more.
WisdomTree, a New York-based exchange-traded fund, recommends to move away from bonds and buy gold, stocks, and other commodities, warning that inflation is here to stay for at least the next 5 years.
"We're looking for inflation hedges and alternatives to bonds, which we believe are challenged in the face of this inflation that we expect … Gold is an inflation hedge, which is a little bit more of a defensive asset, and broad commodities are a little bit more cyclical,” WisdomTree's global head of research said.
Gold held firm below a two-week high on Monday as concerns eased over the Fed’s plans to increase rates earlier than expected amid rising inflation concerns.
Spot gold was up 0.1% at $1,788.60 per ounce after reaching its highest since June 18 at $1,794.86 on Friday. U.S. gold futures increased 0.3% to $1,788.50.
Most U.S. markets were closed on Monday for the Independence Day holiday.
It seems that central banks are regaining their appetite for buying gold after staying on the sidelines over the past year: central banks from Thailand to Serbia have been increasing their gold holdings, and Ghana recently announced plans to buy the precious metal.
“Long term, gold is the most significant guardian and guarantor of protection against inflationary and other forms of financial risks,” said the National Bank of Serbia.
In total, Serbia intends to boost its gold holdings to 50 tons from 36.3 tons.
Russia’s gold saga continues: the Finance Ministry said on Monday it would buy $4 billion worth of gold and foreign currency in July.
The ministry did not give any more details of its gold-buying plan, mentioning the yellow metal in the monthly release for the first time on record.
A reminder: last month, Russia said it would completely remove US dollar from its $185 billion wealth fund and replace it with assets denominated in euro and gold.
In all fairness, it’s getting harder to imagine a future without cryptocurrencies. But what will they look like in 50 years? We can’t say for sure, but, clearly, digital coins will forever change the way we understand and interact with money.
That’s what experts told CNBC:
Ivory Johnson, certified financial planner and founder of Delancey Wealth Management:
“Cryptocurrencies will disrupt traditional finance because one of their most attractive utilities is the ability to efficiently transfer payment across borders with little to no cost, delay or foreign currency fluctuations. With respect to bitcoin, 50 years is a long time and bitcoin could either become the world reserve currency or the next AOL that made a lot of people wealthy until it was unseated by better technology.”
Dragan Boscovic, founder and director of the Blockchain Research Lab at Arizona State University:
“Central bank authorities are busy developing regulations on cryptocurrency. They recognize that digital currencies are native to the digital economy and, as such, are on their way to becoming mainstream in the next 10 years.”
Barbara Roper, director of investor protection for the Consumer Federation of America:
“Sorry. I decided a while back that I’m too old for this issue 🤷 .”
What else is happening
And it goes on… Barclays has stopped its UK customers from making debit and credit payments to cryptocurrency exchange platform Binance. The move comes after the UK’s Financial Conduct Authority said last month that Binance was not authorized to do crypto business in the country.
“This action does not impact on the ability for customers to withdraw funds from Binance. The decision has been taken following the FCA warning to consumers,” the bank said.
China’s crackdown on tech: Beijing has broadened restrictive measures against tech platforms, targeting more US-listed companies after ordering to remove the ride-sharing group Didi Chuxing from Chinese app stores.
The Cyberspace Administration of China on Monday said it was investigating Boss Zhipin, an online recruitment company, and Chinese truck-hailing apps Yunmanman and Huochebang, citing suspected violations of China’s national security and cybersecurity rules.
The platforms are not allowed to register new users while they are under investigation.
Energy prices are holding above the $75 level after the energy alliance, often referred to as OPEC+, failed to reach a key deal on their oil output policy amid rising tensions between Saudi Arabia and the UAE.
On Friday, the energy alliance, often referred to as OPEC+, voted on a proposal to increase oil production by roughly 2 million barrels per day between August and the end of the year but the UAE rejected the plans. Reuters said, citing sources, that the talks had been postponed with no new date set.
Amazon CEO Jeff Bezos handed the reins over to cloud-computing boss Andy Jassy on Monday as he prepares to blast off into a new career stage and turn his attention to his private space exploration firm.
Twenty-seven years to the day after Amazon was incorporated, Bezos will transition to Executive Chair of Amazon’s board, not long after the company surpassed $100 billion in quarterly sales for the first time.
Oh deer 🦌 ! With lockdown still in place in some parts of the world, running into a wild animal can cost you some 💰.
Australian authorities have fined two nude beach sunbathers for breaching COVID-19 restrictions after they ran into a forest, scared by a wild deer, and got lost. Of course, the incident went viral on social media.
See you next week!