Who Hates Gold?

These are my guesses.

Wall Street- HATES GOLD. Why?

My guess is that as people buy gold it is not traded very often. Keep in mind that money in motion is what Wall Street wants. A great example of why was brought up in the movie “Trading Places” with Eddie Murphy and Dan Aykroyd. When Eddie Murphy gets the job that Aykroyd previously held it was explained that, as clients make trades, they may make money-or not- but WE get paid for every transaction. If people buy and hold assets the HOUSE doesn’t constantly get a piece of the action.

Since most physical gold buyers are buying it for stability and to keep up with inflation it is held for longer periods and impedes commissions. This is likely the main reason why gold is rarely mentioned even though it has performed better than most other assets since the year 2000.

Every all-time high is celebrated in the “markets” but with gold also hitting all-time highs there appear to be crickets. How many people realize that as of Nov. 20th. Gold has risen over 32% in 2024?

CENTRAL BANKS AND MAJOR BANKS- Hate gold publicly but hoard it privately.

Central banks have been buying gold in record amounts particularly since 2022. This is being done to avoid counterparty risk- which is the risk of someone’s promise to pay not being kept. Another reason is to avoid sanctions. Since 2022 the central banks have SOLD $1 TRILLION in US Treasuries and have BOUGHT $1 TRILLION in gold. Publicly they call it a pet rock and other derogatory terms to, in my opinion, keep us commoners off the scent as they buy it all. If we were in on it, they would have to pay substantially more. Andy Schectman says that the central banks use the PRICE as a diversion. What this means is that they manipulate the price (almost always lower) with paper contracts, and it gives the illusion of more gold than actually exists and also makes it appear “risky” while they list it on their balance sheet as a tier 1 (riskless) asset. They are “printing” their product (currency) and buying gold. What does THAT tell you?

Governments around the Globe … Hate it!

Why? Because if we had real asset-based money- instead of the debt-based system we have been saddled with our own government here would not have collected TRILLIONS in capital gains taxes and income taxes. As I wrote weeks ago homes would be less expensive today if valued in gold than in 1890. Oil would be cheaper today if valued in gold by 66% than it was in 1975. If we measured GDP in gold it would be SMALLER than in 1960. You get the picture. The inflation causes PRICES to rise even though no additional VALUE has been created. It gets taxed anyway.

Another advantage to gold would be that all these foreign wars could likely not be financed- that would be the greatest attribute in my opinion.

Investors… For the most part neither love nor hate gold- most just don’t care.

Many are busy chasing the latest fad or buying crypto and are too busy to find out that gold has outperformed all asset classes since the year 2000, besides Bitcoin which I consider a speculation- not an investment- and that the S&P- if valued in gold rather than dollars would have a slightly negative return since 1971.

24/7 advertising for trading and chasing the latest “hot stocks” have made most people gamblers rather than investors. Some have been wildly successful while most wind up losing rather than winning.

An “investor” like Warren Buffett will say his holding time is forever. What I believe he means is that he is buying a great company- hopefully undervalued and is looking for solid long-term gains. The fact that Mr. Buffett has a cash hoard of over $325 BILLION should be a warning sign but most won’t pay any attention. Why should they listen to a self-made billionaire who did it ONLY through investing when they can get a teenage guru to pick stocks to trade?

As a matter of fact, Charlie Munger, who recently passed away, was asked why they were holding so much cash- and this was BEFORE the last run up and he said that he wasn’t just going to buy something to buy it. He was basically saying that all of the stocks he was looking at were too expensive to buy. They are far more elevated today.

Who loves gold?

Anyone who loves gold should consider getting a life. Personally, I appreciate gold. I like the look. I like the fact that it has been recognized as money for over 5000 years. I like the fact that I am not counting on a promise to pay me. I also like the fact that it is, in my opinion, the best hedge against inflation and an asset that generally performs well when governments lose trust, there is social upheaval, and wars.

I am also a believer that the debt we have built up to astronomical amounts can NEVER be paid off with our currency surviving. If a promise cannot be kept- it won’t be. My only question is will we collapse quickly because debt creation ceases, or will we keep “printing” until the little VALUE left in our dollar is extinguished. Time will tell.

In the meantime, I see gold as far more VALUABLE that its current price suggests and all debt-based assets in a bubble that has never been so large in history. I believe it is a matter of time before the rest of the world is going to demand something other than dollars as payment. It is starting already.

Nobody can time when bubbles pop and undervalued assets rise but I believe we are close. It appears that Mr. Buffett may agree.

Be Prepared!

Any opinions are those of Mike Savage and not necessarily of those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information in this report does not purport to be a complete description of securities, markets or developments referred to in this material. The information has been obtained from sources deemed to be reliable but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.

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