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Re: Got Gold?If you believe gold is an insurance policy on world central bankers losing control of the value of fiat currency...it's looking interesting for the next 3-5 years, or maybe 10 years. Here's the simple case for gold: 1. Debt + deflation = bankruptcies (which governments don't like) 2. The solution the last two crises (2008 and 2020) was massively more debt. If the price of gold starts running, we can't afford to raise interest rates to 18% like Volker did in the 1980s to stop inflation. Evidently, we can't even afford 3% today. We're at 0%, and there is $17 trillion in negative yielding government bonds worldwide today. 3. Eventually we will have to admit the US can never pay back its debt. It can't even limit its debt growth rate to GDP's growth rate. 4. At some point it's obvious that we just print with no intent to reel it back in at a later point. Then (which is now) is when you want to own gold. 5. Traditional entitlements: social security, medicare, welfare, a war machine, tax cuts, stimulus checks in times of need. 6. New entitlements: Paycheck protection, state bailouts, debt repurchases, airlines, hotels, cruise ships, hospitals, small businesses, rent checks, student debt, recovery checks, stock and bond market stability purchases, free healthcare for all... 7. Gold retains its value because it cannot be created by keystroke or government mandate. Even in time of war, gold is always accepted for goods, services or munitions. Covid-19 has not reduced the demand for gold...on the contrary. 8. Gold miners are producing gold at a cost of between $600 and $1200, and the recent price rise to $1700 has barely hit their income statements, due to normal reporting delays and Covid-19 shutdowns. When it does hit the bottom lines of gold companies...you might just see some serious price movement. Additionally, more ounces will become profitable for gold miners to mine. 9. Streaming & royalties companies, although perhaps a bit ahead of themselves, might be an even better bet: FNV, RGLD, WPM, SAND, OR, etc. I'd recommend gold, miners, and streaming companies. Same goes for silver... |
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