Good thread from Adam Cochran - worth knowing:
What people don't realize is that BlackRock actually created the gold market as we know it today.
Before BlackRock, it was a $1 trillion market.
Now it's about $13 trillion.
So how did they do it?
BlackRock has an army of consultants around the world who receive commissions for promoting their products.
And while they have many brands for their funds, they are best known for iShares, which offers 3 of the 5 largest gold ETFs in the world.
BlackRock has tools that allow its advisors to earn 3% advisory fees on the products they sell, as well as add custom advisory fees.
Additional fees may also apply depending on the jurisdiction of the offer and the consultant. But most places charge for new products sold.
And due to different rules, alternative assets can be more profitable than standard stocks.
But when BlackRock introduced its gold product, they began adding it to their advisor model portfolios.
Advisors eager to promote the product and earn commissions on the new asset class began telling boomers that gold was an ideal component for rounding out a portfolio and as a hedge against inflation and other risks.
This led to an increase in investment demand for gold.
While most of the world's gold demand is still focused on real-world applications (jewelry and technology), this push has increased demand in the investment sector to almost 25%, leading to a second-order effect of increasing the amount of gold that central banks are buying.
Because people valued gold, central banks in turn valued gold and quickly increased the demand for it.
All growth comes from this push.
Before this, gold had exchange-traded products - in fact, there was a gold ETF in Canada back in 1961.
In 2004, State Street launched its gold ETF SPDR, which is the largest of all gold ETFs. But BlackRock, through its army of advisers, promoted an idea that gave gold broader legitimacy in a portfolio.
His network has told millions of users that you need gold to have a well-balanced financial safety net.
Having done this for two decades, we now find that young asset managers and economists who have risen to positions at central banks and sovereign wealth funds view the gold-as-portfolio-safety narrative as a no-brainer.
The same will happen with cryptocurrency.
We have non-US ETFs and US ETPs.
BlackRock will arm advisors to train millions of consumers on how to allocate X% of their portfolio to crypto and completely change the narrative.
Then, as the dollar falls and a new generation of money managers, bankers and economists raised in the digital age rise to the chairs of central banks, where do you think they will turn for reserves?
What will they invest in the future of their country?
