Maybe you’ve noticed gold and silver prices rising the past week and change, but likely you have not.
These two precious metals, with silver also being an extremely widely used industrial metal, operate in an investment netherworld as far as the general public and conventional business/financial cable networks are concerned.
When gold or silver are mentioned on these cable venues, it’s often in a snarky way. This happened twice already this week on CNBC’s daily wrapup show Fast Money.
There was a guest host sitting in one day, this being a day on which gold and silver had risen notably. So, the show deigned to slip in a segment on gold. The regular host returned a day later and did the same reluctant acknowledgement of positive gold price action.
In the guest host example, one of the regular panelists noted early on that he knows she “hates” gold, which she did not deny.
What followed was the usual litany of trite laments about gold not having a dividend, not producing earnings, and being reliant as an investment merely on price appreciation, or depreciation of a competing asset in the form of national currencies.
Of course most of the same things can be said for your house, in spades, yet these investment shows regularly devote copious amounts of time to real estate. The family home is hailed positively as the cornerstone of the average family’s net worth.
Still, just like gold, your personal residence does not produce income if you live in it, does not pay a dividend, actually costs you money to use it in the form of real estate taxes, homeowners insurance and even utility payments.
It was ironic that Mrs. I Hate Gold was displaying her disdain for the precious metal shortly after the show had run a segment on Bitcoin, the crypto currency that has no yield, no earnings and relies on price appreciation to reward investors. But no such snarkiness existed on that segment.
Bitcoin is sexy and attracts viewership despite the fact it trades just a little above half of its all-time high of $68,798 per “coin.” Bitcoin is not a coin, but instead a digital entry on a computer. Repeat, there is no tangible coin, although the symbol for Bitcoin often is a gold coin with a B and dollar-sign-like vertical lines running through it.
Allow me to emphasize that this all transpired on CNBC, which is a font of investment misinformation.
A key dispenser of same is Jim Cramer, whose show follows Fast Money on week nights. Cramer is often wrong, but never in doubt.
His most infamous boner of advice came on March 8, 2008, in the midst of what now is known as the Great Financial Crisis. Cramer went on a rant – his favorite shtick along with sound effects – to lecture viewership that financial company Bear Stearns was solid.
A viewer had written asking this sage’s advice on the whether or not he should be concerned about Bear Stearns and withdraw his money.
Responded Cramer, according to transcripts you still can find easily on the internet: “No! No! No! Bear Stearns is fine. Do not take your money out.”
The rant continued and ended with Cramer advising the guy not to be “silly” by withdrawing his money.
Bear Stearns stock at the time traded at $62 a share. It was bailed out just five days later by the financial firm JP Morgan Chase for, wait for it, $2 a share.
Bear Stearns was anything but fine.
Gold had traded early on March 8, 2011, at $1425 an ounce. As I write this sentence, 8:02 a.m. Thursday Nov. 30, 2023, it’s trading at $2,038.30, down 4.30 in overnight trading.
Clearly, buying gold then would have been better than Bear Stearns stock, but you’d have been unlikely to get that message on CNBC.
CNBC worships at the feet of Warren Buffett and Charlie Munger, the later having died yesterday. They are/were investment legends, that CNBC loves in part because of their shared hatred of gold, branding it a pet rock and something one might need to sew in their garments if they were Jews during the holocaust, but clearly not an investment.
Yet Central Banks, the national concerns such as our own Federal Reserve, hold large amounts of gold and have been adding to it at record rates in these troubled financial times.
That number was 800 tons of gold purchased through the first nine months of this year, up 14 percent year-over-year according to the World Gold Council.
Gold is financial insurance, an asset that is not dependent on the financial health of some third party such as bonds and shares of stock rely on the strength of the issuing company (Bear Stearns!) or a currency, which relies on the stability of the issuing nation.
Gold has been wealth for thousands of years. China and Russia, among others, are buying gold to isolate themselves from being under the thumb of the U.S. dollar, the current world reserve currency.
There are many in the financial community (ones unlikely to show up on CNBC) who predict a dire future for the U.S. dollar due to our nation’s fiscal overreach and, by consequence, a good future for gold.
This also would be good for silver, gold’s poor cousin. The argument is made that silver would provide even more upside leverage, considering it now trades at around $25 an ounce, roughly half of all-time highs of approximately $50 previously hit in 1980 and 2011.
Declining interest rates, as the Fed tries to keep the economy going in 2024, should lead to a lower dollar and higher gold and silver.
That’s the way I’m betting. But I’m no financial expert, so you shouldn’t attempt to mirror me.
Better to wait for Cramer’s next Bear Stearns moment.
Sam Ross Jr's site 