The expansion of wealth in the world could be considered a sign of general prosperity, but far from the truth. Unfortunately this expansion only benefits a small minority of the population. The widening wealth gap between the rich and the poor hampers the fight against poverty, destroys the economy and intensifies the world’s anger. Although this gap is growing and widening, it is expected to narrow considerably soon.
The evolution of the ranks
In 1989 there were 9 billionaires in the UK. In that year, £30 million was enough to be ranked 200th in the Rich List.. Not least of all, the evolution was significant”?. Indeed, in 2019, to appear on this Rich List, one needed to have a net worth of £700 m. There was a 24-fold increase in 30 years in order to be ranked among the 1,000 richest people in the UK.
Over the next 10 years, none of the UK’s 1,000 richest people could have imagined that they would lose 75-90% of their wealth in real terms.
This huge depreciation represents the fall in the value of one currency relative to another.
Overall, the wealth of the world’s billionaires has increased by 900 billion in 2018, or 2.5 billion a day.
Billionaires in the world
As the Sunday Times reported in an earlier article, the UK has 151 British billionaires amongst its 1,000 richest residents, which equates to a total wealth of £771 billion.
Physical gold wealth
The people on this Rich List who have converted their wealth into physical gold have done so with only 5%, whereas it is strongly advised to own at least 10%. This conversion would mainly enable them to protect themselves against the imminent implosion of their wealth. Indeed, gold allows them to protect themselves against a fall of major currencies and a return of inflation.
Real estate vs. gold
Comparatively speaking, gold has never been so cheap as in the face of real estate bubbles and a looming recessions. Owning gold is the best way to hedge against inflation. As seen on the chart, there are several cycles in which there are opportune times to buy or sell. Indeed, the average price of a home in 1930 was equivalent to 60 ounces compared to 870 ounces in 1870. This cycle, which was repeated in the 1970s and 2000s, is likely to be repeated in the near future. Gold is the best insurance against poverty and devaluation.
Bitcoin, on the other hand, is not a sure thing. Indeed, gold is sitting on a physical asset, which is not the case with bitcoin. Its existence is purely electronic, and is therefore unstable, contrary to the confidence that one can have in gold, which is stable.
“When the dollar reaches almost zero, gold will reach almost infinity.”
Of course, the value of gold is a function of supply and demand, like everything else! But from a theoretical point of view, the value of gold is supposed to be equivalent to the total value of all the cash in circulation around the world, so the more this volume increases, the more the value of gold should increase.
As inflation expectations tend to rise, in the context of economic stability and the large-scale support measures adopted by major countries, the Fed’s monetary policy should still maintain a very flexible stance. In this case, real interest rates are expected to remain under pressure in 2021, which could support gold.
