Gold is being hammered by a strong dollar. It's down almost two percent just today. Paper contracts are currently being traded at $1,667. If the support line at this point breaks, we're heading down to the next support line at about $1,600. It's nerve-racking and depressing.
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| Monthly chart captured July 14, 2022 |
However, we're still up about 5% on the year in euros, even if we're down relative to the dollar. We're also doing better than the S&P 500 or Bitcoin.
This illustrates the importance of perspective when it comes to savings. The first thing we should do when we feel uncomfortable with short-term moves is to zoom out. What happens in a day, or a week isn't important. We need to look at monthly charts to get a proper view of things.
Furthermore, we should make fair comparisons out of fairness to ourselves. What else could we have been saving except for cash? Bitcoin comes to mind. S&P 500 is another alternative. Let's see how they have fared over the last 12 months in terms of dollars:
Relative to holding Bitcoin, savers in gold look like geniuses, and we're also better off than savers in stocks. We have an unusual situation on our hands, where saving in cash is the best option, but that's not likely to persist for very long. Besides, the prudent saver has some cash savings as well. Seen in this perspective, what is there not to like about our position in cash and gold?
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| British gold sovereign |
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