Debating Investment: A Response to Viktor Zsiday's Article

Gergely Juhasz's response to the article published on holdblog — Viktor Zsiday: "A Pointless Investment, Yet Expected to Rise" —

Given that investment gold (much like Bitcoin) has no owner, anyone can dismiss it as a "pointless investment". There is no one to object, except a self-appointed advocate and gold trader/investor such as myself.

Gold is almost the only investment to which people attach genuine emotions — gold can be loved, hated, or invested in "holding one's nose".

The reason is that gold has played a central role in humanity's financial history over the past few thousand years, and so our relationship with gold is embedded in our very nature — differently for each of us.

Since 1971, however, the financial world has freed itself from the gold anchor, and the new normal became that money can be printed freely by whoever holds power, for as long as people's trust in it does not entirely evaporate. Our entire financial system has become unsustainable and we are sitting on a ticking financial time bomb — but that is a topic for another article.

Back to the subject of pointless investments: let us ask the supreme authority, who was the instigator of the most recent stock market mania:

What Is a Pointless Investment?

ChatGPT 4o: _"A pointless investment is a financial instrument or project that is not expected to generate a profit and, in fact, often produces a loss."_

Let us compare the performance of the Citadella Fund managed by Viktor Zsiday and physical gold, to arrive at an answer to the question posed. The chart speaks for itself:

Both are sensible investments, since both generate profit and returns. If someone invested 1 million forints in physical gold since Goldtresor's launch in September 2018, that would now be worth 2,530,000 forints (before costs), while the value of a Citadella unit would be 1,590,000 forints (before costs).

For the sake of comparability, a few words on costs are warranted.

Goldtresor currently charges 3.4%-4.9% (depending on the account package) for a round trip on physical gram gold, plus an annual insurance fee of 0.6% on stored physical gold.

Over approximately 6 years, this amounts to around 170,000 forints in total, which is deducted from the 2,530,000 forints.

The fee structure for securities is far more complex — distributor-specific additional distribution fees, redemption penalties and securities account maintenance fees may also apply (on top of costs built into the fund unit price!), but the total cost is likely to reach 100,000-200,000 forints over 6 years on a 1 million forint investment.

The tax advantage, however, clearly lies with investment funds held in a TBSZ account: if someone locks in their investment for 5 years they pay no tax.

But What Is Driving the Gold Price Higher?

Is it really only the (temporary?) frustration of Asian investors and a lack of investment alternatives?

A superficial answer to this question will not do.

The rise in the gold price is beginning to foreshadow a far deeper realignment — namely the shift in the global power structure and the parallel preparation for a fundamental transformation of the financial system.

Sadly, many people — including respected opinion-forming professionals — fail to recognise this.

The concept of "risk-free return" — a fundamental building block of modern financial economics, used in countless pricing and risk management models — is beginning to creak and groan, as financial influencer Anthony Pompliano, widely respected in crypto investment circles, encapsulated in a brilliant turn of phrase: US Treasury bonds have until now represented "risk-free return", but are increasingly becoming "return-free risk" in portfolios.

The ecological systems of our planet and the economic system built by man show surprising similarities. These systems are capable of continuous or even sudden state changes, as a wonderful lecture by Oxford Professor Robert May, available on video, illustrates.

But let us return to gold investment:

What Matters More? Gold's Ability to Generate Returns or Its Role as a Wealth Preserver?

Are we even framing the question about returns and interest correctly?

Should we not instead be asking how many goods and services one gram of gold could buy six years ago, and how many it can buy today?

Looking at the official KSH price indices, the 1 million forints invested in gold six years ago would need to be worth approximately 1.6 million forints simply to have preserved its real value. Gold investors have therefore theoretically achieved a substantial real return over the past 6 years (they have gained additional purchasing power).

But let us settle for acknowledging that over the long term, gold investment preserves our purchasing power — so if we flip the perspective and begin measuring the value of goods and services consumed in terms of grams of gold, and we actually acquire the gold intended to fund our future consumption (or at least part of it), then the historical data confirms we are acting wisely.

_I would still contend, however, that the most important attribute of gold investment is its role as a wealth preserver._

At this point, we must pause for a moment.

If you genuinely want to invest in gold, there is truly no point in investing in so-called paper gold (gold-investing ETFs, exchange-traded futures, etc.) — the instruments that investment funds (such as the Citadella fund managed by Viktor Zsiday) use to gain gold exposure.

Since the spring of 2020, we know from experience that physical gold contains a premium that is invisible in "peacetime", but becomes visible when the market envisions a collapse of the financial system: physical gold decouples from paper gold — the latter's price tends toward zero, while the former genuinely becomes a wealth-preserving asset.

(Anyone wishing to understand why in detail can watch from the 48-minute mark of the summary video of our international precious metals conference held in autumn 2023.)

How well protected are investors' portfolios against a crisis in which another massive round of dollar printing would no longer help, because confidence in the dollar collapsed simultaneously?

Responsible financial media and influencers should not ridicule or dismiss the asset that, in the event described above — with non-zero and indeed growing probability — could represent virtually the only wealth-preserving instrument. In fact, their responsibility lies precisely in drawing attention to this in a professional manner.

The roughly 10 grams of MNB gold reserves per capita would cover perhaps one month's worth of food — in short, it is high time for retail investors to begin accumulating physical gold.

_The author is CEO of Conclude Zrt., a distributor of investment gold, and founder of Goldtresor._

If you want to invest in genuine gold, register with Goldtresor!

View Account Packages!

If you are interested in what products you can purchase in addition to the precious metals account management service and gold and silver storage, take a look at our Products:

View Products!

If you would like to educate yourself as a gold investor, download our 72-page Gold Investment study:

Download the Gold Investment Study!