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An expanding money supply #FinanceFriday

When investors are fearful and expecting the worst they buy gold. An expanding money supply also prompts investors to buy gold. The price of gold has gone up all year driven by that demand but the gold bull run is coming to an end as investors see better opportunities. They are returning to the stock market but for some strange reason, they are also turning to cryptocurrencies. Should you join the rush to buy bitcoin? I’m not tempted but if you can afford to buy into oil and natural gas then that would seem to be a good investment as the world economy gets moving again.

an expanding money supply

Expanding money supply

We have seen an expanding money supply in the UK and Europe but we are still waiting for more stimulus in the US. I expect there will be an expanding money supply next year with Biden as president which will allow the UK and Europe to expand further. That monetary expansion will drive inflation and so inflate away some of the national debt but most of that extra money will be reinvested. That will drive the stock market upwards or at the very least keep it stable. Some of the extra money will go into property pushing up property prices particularly in London and the southeast.

Oil

As the world economy opens up we will see an increased demand for oil and the US is now producing less even though they have stockpiled it. We are already seeing an increase in the oil price and so my recent investment in Royal Dutch Shell seems to be a good one and this week I bought shares in BP to add to that. My investment in RBSB is already showing a paper return of 15% and I expect BP to go the same way. My investment in Barclay’s is up over 50% and promises to keep going north as long as we keep progressing and coming out of this epidemic. I increased my investment in Lloyd’s Banking group and their share price is recovering. I’m 25% down but Lloyd’s should recover and give me a return on my investment. Premier Foods seems to go well when the market is down and I’m still 86% up on PFD.

Reduced incomes

Many people have reduced incomes and are having to consider the future. Planning holidays isn’t a good idea and going to the pub is something many people think twice about. The cost of Christmas will be reduced for many people. I am buying presents but I have just been adding things to my supermarket order. I’m not going shopping for the foreseeable future. I might buy petrol but even that will be with minimal contact with people!

Changing the way we do things

I did a meeting with Zoom yesterday and we have to think about changing the way we do things. Covid could be around for some time. I managed to reach over 3,000 people with a Facebook post yesterday and I am going to try to improve my social media skills and get used to Twitter and Instagram more. These new ways of communicating could be the new normal!

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