Voima Weekly #29 – Price Movements Ahead

Long-exposure photograph of a rocket launch, with its light trail streaking across the sky above a Florida residential neighborhood. Image: stock library.

Gold’s long-term movement does not arise from a single geopolitical shift, an election result, or an isolated crisis. It is driven by structure: debt levels, central bank balance sheets, the dynamics of the monetary system – and by the fact that in major economies such as India, China, and the Middle East, gold is embedded in family culture, dowries, intergenerational wealth transfer, and a deep-rooted skepticism toward political money. Ultimately, it reflects how purchasing power evolves relative to real assets.

In the West, gold has long been treated largely as a marginal asset class. In many other cultures, it has been part of everyday life and security for centuries. If pressure within a debt-driven system continues to build here as well, it is possible that gold gradually returns to a similar role in the West – not as an ideological statement, but as practical preparedness.

On weekends like this, when a major power makes a military move and headlines dominate the news flow, two types of buyers understandably appear in the market. There are insurance buyers – those seeking protection from uncertainty – and there are speculators, seeking movement. These are tactical reactions, comparable to an umbrella vendor stepping into the marketplace when the rain begins. The advantage lies in speed and readiness, and behind that must be the capability to act when the moment presents itself.

Strategic allocation is built on a different mindset. Insurance is incorporated into the core allocation with discipline and deliberation, not driven by momentary turbulence. The decision is made when thesun is shining – not in the midst of the storm. Such an investor also understands that corrections are not anomalies, but a normal part of a bull market’s dynamics.

Over the past week, I have held discussions with several institutions regarding gold allocation. After years of similar conversations, it appears that the obstacle is not a lack of understanding, but rather a reluctance to act before others within the same peer group do so. A doctor who recognizes an illness but refuses to begin treatment cannot justify himself by claiming the diagnosis was correct. The same principle applies here.

One of the most popular investment targets remains real estate – particularly assets where the tenant is a public entity or an organization whose cash flow is effectively dependent on tax revenues. It is perceived as safe because the income stream appears predictable. But where does that income ultimately originate?

In Finland, the public sector has run deficits for decades. Maintaining that structure requires not only taxation, but debt. Debt requires interest. Interest requires money. And money is created within a system where the money supply expands. If we base a “safe” investment on cash flows supported by a system that has been structurally deficit-driven for decades, already leaning heavily on taxation – and even that is not sufficient – then it is worth pausing to ask: what is the real risk?

In an interview with Helsingin Sanomat¹, OP-Pohjola’s Chief Strategist Lippo Suominen noted that “traditionally, U.S. government bonds and the dollar have been liquid and easily accessible safe havens. Real estate has also traditionally been regarded as a safe haven – even though its price fluctuations have at times been significant.” It is sometimes worth looking behind tradition.

A government bond is a safe haven only if public finances are managed with discipline. A currency is a safe haven only if confidence in its purchasing power is maintained. And real estate is a safe haven only if the underlying economy remains reasonably sound. Its value depends on interest rates, taxation, demographic development, the sustainability of public finances, and ultimately on where the tenant’s cash flow originates. If the system itself is structurally deficit-driven, no asset within it is entirely insulated from that risk.

Gold’s advantage is not its yield; its advantage is its global liquidity. It is not the debt obligation of a single state. It is not an extension of one economic region’s cash flow. It does not depend on a single central bank. Gold is an asset that exists above individual states. Therefore, the question is not whether something has “traditionally” been a safe haven. The question is whether the structures that once made it a safe haven still exist.

Suominen concluded the interview by saying that “perhaps the golden age has only just begun again. Traditional safe havens are no longer as stable as we once assumed.” There is wisdom in that observation – although gold may well be the most traditional of them all.

“The recognition of facts is the beginning of wisdom,” said Juho Kusti Paasikivi.² By background he was a practical banker: he negotiated, he calculated, and he ensured that Finland remained functional in difficult times.

In economic terms, this means recognizing debt as debt, acknowledging that monetary expansion erodes purchasing power, and recognizing risk as risk; not as safety, when it rests on a structurally normalized political deficit.

The market reacts to this weekend. Our task is to look further ahead and act accordingly. There is work to be done on our own table as well - and rightly so. Structures do not change through words, but through action.

–Marko Viinikka
Founder, CEO
Voima Gold Oy

Disclaimer: Voima Weeklies are the personal writings of the undersigned. They do not necessarily represent the official view of Voima Gold Oy or any other company, nor do they constitute investment advice or a recommendation to purchase securities.