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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

The Notre Dame Fire: Lessons for Gold Investors

Commodities / Gold & Silver 2019 Apr 18, 2019 - 07:47 PM GMT

By: Arkadiusz_Sieron

Commodities

The Monday’s fire of Notre Dame Cathedral shocked the world. Since then, the French, the Catholics, and the architecture and art lovers hadn’t been talking about anything else. The precious metals community was less disturbed – even though it turns out that gold investors can actually learn a lot from the Notre Dame’s fire.

We have visited Paris for the first time only a month ago. Maybe this is why the images of Notre Dame being consumed by fire have aroused our emotions, even though we are not connoisseurs of architecture. Luckily, the cathedral has survived and the scale of damages is not as grave as it first seemed.


Of course, we do not want to talk about the causes behind the fire or about the subtlety of Notre Dame’s restoration, but to point out one powerful photography. You may have already seen it elsewhere (see below). The image shows a Notre Dame’s golden altar cross seen glowing among the ashes inside the fire-ravaged cathedral.

The fact that golden cross remained untouched for some people is a clear sign of divine protection of Our Lady Blessed Virgin Mary. Without prejudging the matter, let’s note the unique nature of the yellow metal, which helped the golden cross to survive intact even though the wooden roof burned down. You see, wood burns at around 600°C, while the melting point of gold is about 1064°C. The flames could not harm gold.

This is why gold was chosen as money. On the one hand, it is practically indestructible, since it resists attacks by acids or corrosion and most other chemical reactions. It is unaffected by air, heat, moisture and most solvents, being one of the least reactive chemical elements. On the other hand, gold’s melting point is low enough to be easily melted down into bars. For comparison, platinum has a melting point at about 1768, so early societies were unable to conveniently shape it into uniform units.

And this is also why gold is a portfolio diversifier. During a financial catastrophe, many assets turn into ashes, while gold remains untouched and glows amongst them. The Great Recession might be the best example. The stock prices plummeted in 2008, but gold gained almost 3 percent that year. This is the first lesson of the Notre Dame fire for the gold market: wealth is fragile, so it’s good to have insurance. The cathedral was not insured, but it will get help from the State and French billionaires. But you, you have to count on yourself – and your shiny friend.

The second lesson is that we have to be humble. The Notre Dame, at 856 years old, seemed to be indestructible. After all, it survived centuries of turmoil, including the French Revolution and both world wars. But then it was almost completely burned. The irony is that the fire was probably caused by ongoing renovations. It shows that you should always challenge your assumptions and be prepared for the worst scenario. Gold helps considerably in this aspect.

However, being prepared for the worst scenario does not equal being a doomsayer who expects the worst all the time. Actually, when you are really prepared for the catastrophe, you do not have to think about it all the time – you can focus on other things. This is why we suggest investors to divide their precious metals portfolio into three main parts: insurance, investment and trading.

So, we have to be humble also when it comes to investing in gold. Yes, gold is practically indestructible, and it shines during financial crises when all other assets turn into ashes. Its price fluctuations can be (and are) quite volatile. It’s not a one-way elevator. As history shows, gold may be traded sideways or even trapped into bear markets for years. Translating technical insights into strong trading decisions, is the reason why we provide you with daily Gold and Silver Alerts. In order to take advantage of the intraday moves, we have recently launched Day Trading Signals. They are still freely available right now. If there’s one thing to check straight away, it’s their performance page.

Healthy societies accumulate and preserve capital. The Notre Dame Cathedral is one of the greatest examples of civilization wealth. Its fire reminds us how quickly centuries of accumulated capital can be destroyed. Hence, adding some gold to portfolio as an insurance seems to be a smart idea.

Healthy societies consist of responsible people who accumulate and preserve wealth. We are proud that we can help in this civilization process. Having an insurance protects our capital, but gaining from price movements can multiply it. This capital accumulation enables humans to create wealth lasting far beyond their lifetimes – whether it will be embodied in a beautiful cathedral, in children’s education or just in the family’s financial security.

Thank you.

If you enjoyed the above analysis and would you like to know more about the link between the U.S. economy and the gold market, we invite you to read the August Market Overview report. If you're interested in the detailed price analysis and price projections with targets, we invite you to sign up for our Gold & Silver Trading Alerts . If you're not ready to subscribe at this time, we invite you to sign up for our gold newsletter and stay up-to-date with our latest free articles. It's free and you can unsubscribe anytime.

Arkadiusz Sieron

Sunshine Profits‘ Market Overview Editor

Disclaimer

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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