Bill Gates Drinking Anti-Gold Koolaid
Ryan JordanIs the system trying to tell us something? First Charlie Munger, now Bill Gates on CNBC trashing and dissembling on gold?
So much misinformation in the Bill Gates interview on CNBC, or just fantasy, that you really have to believe that Bill is some sort of propaganda minister for the powers that be.
First off, most emerging central banks have way less than 5% of reserves in gold. They, like everyone else, went into this crisis with far less gold as a percentage of reserves than 40 years ago. Russia and China continue to make noise about moving away from the U.S. dollar (note that I did not say replace, as we aren't there yet in my view); and as proof, gold imports into Hong Kong are still soaring. I haven't checked Russia recently, but you can bet that they are strong. I haven't even mentioned India, Brazil, countries in southeast Asia, or others in Latin America.
When the social mood changes, and in this case it has changed drastically, there is practically no peak for an asset that still comprises at most 3-5% of global financial wealth. Of course there is a peak at some point, but like in 1980, when the value of gold in the US exceeded the value of the US stock market, that peak is very, very high. In fact, by my math, it is over $15,000 an ounce. (Please note that this will not happen tomorrow, though.)
Second, it is a bald-faced lie to claim that "all of this new gold" is going to somehow come out of the ground. We have been at peak gold for almost a decade now. Digital gold mining? Really, Bill? This is precisely the problem with the hopium computer/internet fantasy crowd: they were conditioned in the 80s and 90s to only believe that the world can get better; that technology can miraculously solve all problems- it is almost a cult of technology or gadgets
more accurately. This mentality has died right along with the world it came from after two stock crashes, the real estate bust, and a public that now realizes something is just not right with the world's financial and political system (see recent elections in Europe for proof.)
Third, I did find it interesting what he had to say about silver, which he once owned, and sold. But he didn't keep going and say that if his technological fantasy world came to be- meaning a world needing to service and produce more and more amazing technologies for BILLIONS and BILLIONS of more people (world population growth has gone exponential, remember)- silver will be in high demand. You can maybe increase silver production 3 or 4% a year, but demand for it (which often exists in very small amounts that are impervious to higher prices) could easily move up by double the increase in production. And this would happen at a time when savers are still being hosed with negative real rates, and where our creditors are still making waves about the need for currency diversification.
And folks, you don't diversity with more paper.
You diversify with real assets, like gold and silver, which (at least in the case of gold) is still a buy in the eyes of central banks and foreign governments who lamented making recklessly optimistic assumptions during the boom time.
Silver is the money of the little people, and collectively they have quite a bit of buying power on their side. And I think they are learning to see through establishment B.S.
These markets are a challenge, there is no doubt about it. You are going to have to live with the possibility of gold going back to at least 1500 and silver to at least 26 for the near term. But I am not a "near term" kind of guy. If you wanted to sell as a trade, you should have done so last year- not now. Now is the time to be buying if you have dry powder, assuming you are a trader (which I'm not.) If you are new to the metals, congratulations- they are now on sale. And they may be getting cheaper.
But they won't stay cheap forever. For some reason, I think the system was actually signaling that in its recent efforts to dump all over the metals, to scare people back into the same-old, same-old investments from a world gone, if not forever, than at least for a generation.
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