There is a perhaps apocryphal story about a visitor to New York City admiring the yachts of the all the brokers and bankers and naively inquiring, “Where are all the customers’ yachts?”
A variation of this is the gambler in Las Vegas taking in the splendor and being reminded that the casinos weren’t built on allowing gamblers to win.
Always in life you are playing against a “house” so to speak. Sometimes it’s readily admitted and often it is not.
In Johnstown, the “house” is all the governmental and quasi-governmental agencies who trample on the right to know of the citizenry.
Nationally, it’s entrenched left wing bureaucrats, judges and various members of misnamed “justice” departments who make it their life’s work to persecute conservatives
In investing, you are up against a “house” of people who have access to better information than you, get better deals than you due to the size of their accounts, and the odd example of outright fraud, witness recent cryptocurrency problems.
The inspiration for today’s post was a segment on CNBC’s Fast Money show, noting (in more like Slow Money fashion) recent price action in gold and silver.
In case you’ve not been keeping tabs, gold as I write this trades at $2,020 an ounce on the spot market, within spitting distance of an all-time high after rising sharply in recent weeks.
Silver trades at $24.90 an ounce, also up big in terms of percentages in recent weeks, but still under one-half of its all-time high price.
The host, supposedly a brilliant sort who too often comes off as a ditz, was playing the ditz role on this topic. Unfortunately, there are regular panel members who mirror her.
An example from today: Two distaff members of the four-person panel were asked to opine on gold in view of this run to higher prices. Both are money managers. Both displayed a facial expression as if they’d just stepped in some dog residue deposited on the sidewalk.
Ooooh! All right, they didn’t say ooooh. They did point out that they like investments with cash flow, and they never understood gold. Yet one said she owns bitcoin. No cash flow there. Not even a there, there.
As one noted commodity analyst used to say, he likes things that hurt if you drop them on your foot, like a bar of gold. A bitcoin is just a few electrons in the ether. They use a coin-like object with a B and lines through it as in a dollar sign to represent Bitcoin, but there is no physical bitcoin, only a computer entry.
A third panel member, a tool who doesn’t like anything except his loser picks, believes gold has gone too far, too fast and should be avoided.
And then there was the fourth panelist, Guy Adami (the only original panelist left). He’s been pushing gold as an investment to counteract governmental economic idiocy for some time.
Adami still likes gold at this elevated price, and its poor cousin, silver.
Thank God for the guest analyst in this segment, Carter Worth, a genius in the use of price charts to divine trend, what is called technical analysis.
Worth came on and classified the investing world into three types of people, those who never would own gold, those who always own lots of gold, and those who sometimes partake to catch rallies.
The thing about Worth is, unlike most liberals, progressives and general climate loonies, Worth brings evidence to back up his assertions. My favorite from this visit was him illustrating via charts that since 1996, a long time in the world of investing, gold has equaled the return of investing in the S&P 500 stocks. That’s including re-investing stock dividends – take that, cash flow wench!
Said wench then was called upon to comment and she tried to be cute, indicating this would make the gold bugs sad because they’d only met stock returns.
But Worth came back that he’d think people who spend their lives analyzing stocks and pitching them to clients of their firms, might be sad that they couldn’t beat simply buying gold.
It was also noted during this show that central banks around the world are buying gold to hedge their moronic policies that have created entrenched inflation and economic malaise. They aren’t concerned about cash flow, but more about having money that isn’t dependent on the promise of others, such as a bank to cover your deposits.
Here’s why most investment gurus – the house – don’t push gold. It’s one decision. Buy it and watch the price appreciate long-term.
Much better to generate commissions buying, selling, re-buying, re-selling stocks, or by selling subscriptions to newsletters pitching stocks.
And when you compare gold to the return of a stock index, that neatly ignores that the stocks in those indexes change. When a company goes bankrupt, it is replaced by another for index purposes. But, if you’d bought that bankrupt stock, you don’t get the replacement for free.
The bottom line to all this is we live in troubled times, both socially and economically. Having gold and silver in your possession will help get you through those times.
But remember the third precious metal – lead – in order to protect your gold and silver.
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