Author Topic: Precious Metals  (Read 64443 times)

ChpBstrd

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Re: Precious Metals
« Reply #650 on: August 03, 2020, 09:38:21 AM »
So I thought about 99% of everyone on this forum hated gold and silver. So strange to see the sudden change of opinions. How many years did people act like you are a moron for even mentioning PMs and doing anything but 100% stocks.

Various investments get popular in the media / social media and so everybody starts talking about them on social media - blogs and forums included. In this way, the ďherdĒ of retail investors bounces around whatever investments recently went up. For example, how much have you heard lately about oil companies, or the basic materials sector, or telecoms, or agri firms? Not much probably. But they were all once the hot topic among retail investors.

Zoom in to today. Suddenly gold is all the rage because it went up. This is despite the increasing likelihood of deflation (see the increasing odds of the entire yield curve going below 1%). Meanwhile, tech stocks are going to the stratosphere, suggesting economic boom times ahead - so why would one need a heavy gold allocation if economic boom times are ahead? Oh never mind... just look at it go up! Whatís missing from the social media buzz is the whole rest of the economy. That and being about 12 months late.

celerystalks

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Re: Precious Metals
« Reply #651 on: August 03, 2020, 10:05:43 AM »
So I thought about 99% of everyone on this forum hated gold and silver. So strange to see the sudden change of opinions. How many years did people act like you are a moron for even mentioning PMs and doing anything but 100% stocks.

Various investments get popular in the media / social media and so everybody starts talking about them on social media - blogs and forums included. In this way, the ďherdĒ of retail investors bounces around whatever investments recently went up. For example, how much have you heard lately about oil companies, or the basic materials sector, or telecoms, or agri firms? Not much probably. But they were all once the hot topic among retail investors.

Zoom in to today. Suddenly gold is all the rage because it went up. This is despite the increasing likelihood of deflation (see the increasing odds of the entire yield curve going below 1%). Meanwhile, tech stocks are going to the stratosphere, suggesting economic boom times ahead - so why would one need a heavy gold allocation if economic boom times are ahead? Oh never mind... just look at it go up! Whatís missing from the social media buzz is the whole rest of the economy. That and being about 12 months late.

Gold has staying power. Anyone who has a 5,000 year investment horizon, like myself, understands this. The idea of an incorporated entity that sells stock to shareholders is only a youngster at a few hundred years old.  It is true that, Incorporation and stock sales have had the power to radically unleash the dynamism of capitalism.  However the laws that protect corporations and their shareholders are not written in stone.  In a time where the unmitigated successes of capitalism are available for the world to see, it has never been easier for the government to expropriate private property and redistribute it precisely because capital ownership is such an abstraction to most folks.


waltworks

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Re: Precious Metals
« Reply #652 on: August 03, 2020, 11:10:36 AM »
Wow, 5000 years?

That's not just aiming for generational wealth, that's, like, about the length of human civilization.

I'm not sure whether to be impressed or amused.

-W

ChpBstrd

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Re: Precious Metals
« Reply #653 on: August 03, 2020, 11:37:00 AM »
Wow, 5000 years?

That's not just aiming for generational wealth, that's, like, about the length of human civilization.

I'm not sure whether to be impressed or amused.

-W

And the USD, which is universally used to measure the value of gold or the profitability of trades, has only been around a couple hundred years. I and a lot of economists would be very interested in a purchasing parity index with empirical support across 5k years so that we could measure the long-term return on various assets (farm land, PMs, urban housing, herds of animals, ivory, etc.).

vand

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Re: Precious Metals
« Reply #654 on: August 03, 2020, 11:59:38 AM »
So I thought about 99% of everyone on this forum hated gold and silver. So strange to see the sudden change of opinions. How many years did people act like you are a moron for even mentioning PMs and doing anything but 100% stocks.

Various investments get popular in the media / social media and so everybody starts talking about them on social media - blogs and forums included. In this way, the ďherdĒ of retail investors bounces around whatever investments recently went up. For example, how much have you heard lately about oil companies, or the basic materials sector, or telecoms, or agri firms? Not much probably. But they were all once the hot topic among retail investors.

Zoom in to today. Suddenly gold is all the rage because it went up. This is despite the increasing likelihood of deflation (see the increasing odds of the entire yield curve going below 1%). Meanwhile, tech stocks are going to the stratosphere, suggesting economic boom times ahead - so why would one need a heavy gold allocation if economic boom times are ahead? Oh never mind... just look at it go up! Whatís missing from the social media buzz is the whole rest of the economy. That and being about 12 months late.

This gold bull market is just nudging into 2nd gear and has much further to run.

Oh, sure, gold is grabbing the odd mainstream headline now, but how many people have actually changed their investment strategy and put a significant portion of their wealth into precious metals?  Very, very few. At best its reappeared on the radar as a quirky alternative.

The gold bull market from 1972 to 1981 saw a 16-fold nominal revaluation. The bull market from 1999-2011 saw a near 7-fold increase.  So far since the last 2015 low gold price has not yet even doubled.. there is no reason why it cannot perform at least as well as the previous 1999-2011 bull market imo, given that the macroeconomic drivers of currency debasement and sovereign debt growth are at least as strong.

celerystalks

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Re: Precious Metals
« Reply #655 on: August 03, 2020, 12:21:49 PM »
Wow, 5000 years?

That's not just aiming for generational wealth, that's, like, about the length of human civilization.

I'm not sure whether to be impressed or amused.

-W

The Long Now foundation is working on a 10,000 year clock to be built in mountain in Texas on Jeff Bezosí land.  Not everyone is so short sighted as myself with only a 5,000 year outlook.

The foundation encourages ultra long term thinking. I personally think that true risk can be mitigated by thinking in ultra long terms as opposed to focusing on short term volatility.  For instance in 5,000 years basically every human event imaginable has happened. Empires were built and destroyed, frontiers were opened and closed, religions were formed and vanished, religiosity waxed and waned, world wars were fought and the world powers sued for peace and won (temporarily), famine gripped the planet, and agriculture was established and improved, and diseases spread, and cures were found, the planet warmed and the planet cooled, etc. Monarchies gave way to Republics. Socialist experiments were responsible for approximately 100 million deaths in the 20th century as well as the destruction of whole societies and their capital stock.

Everyone expects society that they live in to continue on much in the same way it has with minor gradual changes. I know I do. But a study of history tells a different story. Much of history is a list of surprises and how people reacted to them.  Change is often so rapid and disorienting that it causes people to behave in irrational and counter intuitive ways. There is also a tendency to view history through the lens of ďanother time, another placeĒ and view historical actors with contempt and/or treat other countries as an isolated box where such-and-such event occurred. But, in reality anything that happened in history could happen anywhere including here (in the U.S.) if the collective will of the people permits it to occur (consciously or unconsciously), or more precisely is unable to prevent it.  Look only to the severe way the pandemic has changed human behavior and thought in a matter of months for an example (and in the grand scheme this pandemic is minor compared to historic upheavals).

So all one needs to do is design a portfolio that can survive 5,000 years, and this means that the portfolio should be able to survive what any given year can throw at it.

Gold doesnít produce a return. It preserves value when all else fails. So it makes sense to accumulate some as part of an investment portfolio. One never knows when the tide will turn and they have to leave with the clothes on their back and only what they can carry.




ChpBstrd

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Re: Precious Metals
« Reply #656 on: August 03, 2020, 01:15:16 PM »
Wow, 5000 years?

That's not just aiming for generational wealth, that's, like, about the length of human civilization.

I'm not sure whether to be impressed or amused.

-W

The Long Now foundation is working on a 10,000 year clock to be built in mountain in Texas on Jeff Bezosí land.  Not everyone is so short sighted as myself with only a 5,000 year outlook.

The foundation encourages ultra long term thinking. I personally think that true risk can be mitigated by thinking in ultra long terms as opposed to focusing on short term volatility.  For instance in 5,000 years basically every human event imaginable has happened. Empires were built and destroyed, frontiers were opened and closed, religions were formed and vanished, religiosity waxed and waned, world wars were fought and the world powers sued for peace and won (temporarily), famine gripped the planet, and agriculture was established and improved, and diseases spread, and cures were found, the planet warmed and the planet cooled, etc. Monarchies gave way to Republics. Socialist experiments were responsible for approximately 100 million deaths in the 20th century as well as the destruction of whole societies and their capital stock.

Everyone expects society that they live in to continue on much in the same way it has with minor gradual changes. I know I do. But a study of history tells a different story. Much of history is a list of surprises and how people reacted to them.  Change is often so rapid and disorienting that it causes people to behave in irrational and counter intuitive ways. There is also a tendency to view history through the lens of ďanother time, another placeĒ and view historical actors with contempt and/or treat other countries as an isolated box where such-and-such event occurred. But, in reality anything that happened in history could happen anywhere including here (in the U.S.) if the collective will of the people permits it to occur (consciously or unconsciously), or more precisely is unable to prevent it.  Look only to the severe way the pandemic has changed human behavior and thought in a matter of months for an example (and in the grand scheme this pandemic is minor compared to historic upheavals).

So all one needs to do is design a portfolio that can survive 5,000 years, and this means that the portfolio should be able to survive what any given year can throw at it.

Gold doesnít produce a return. It preserves value when all else fails. So it makes sense to accumulate some as part of an investment portfolio. One never knows when the tide will turn and they have to leave with the clothes on their back and only what they can carry.

I was once dumb enough to sit in on a timeshare sales pitch to get some free excursion tickets while in Cancun. It was mostly emotional appeals about how owning a Mexican beach timeshare will bring the family together and great memories and YOLO and all that.

However what stuck with me were a couple of appeals to rationality. The salesman noted that only some fraction of 1% of the earth's habitable land is beachfront property, that coastal areas have drawn together human civilizations for millennia, and that the population of the planet was expanding. Prices might fluctuate, but in the long term your timeshare will be a wealth-building asset he said. It was summarized on a piece of paper with a big plus sign on it, in a quadrant next to decreased cost of vacationing and retirement planning.

Of course I wasn't persuaded, but I'm always interested in arguments that sound logical, maybe have some evidence behind them, and fit into narrative explanations, and are yet totally wrong. That salesman was trying to impoverish me; I knew it. But how could I prove him wrong that 40 years from now there wouldn't be a desperate level of demand for timeshares at old Cancun beach condos?

If in 5 years I had lost $30k in carrying costs on the timeshare and it failed to appreciate, would the salesman's forecasts about this fantastic investment be falsified, or would I have simply not waited long enough for the expected price increase to happen?

After all, he was talking long term and noted that fluctuations will happen. Maybe 20 years is a good timeframe? Maybe my whole life?

There is a line between giving a claim enough time to be proven or disproven, and simply declaring a claim unfalsifiable.

I'm a red panda

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Re: Precious Metals
« Reply #657 on: August 03, 2020, 01:58:03 PM »
Before we had a good investing strategy, most of my IRA was in precious metals. Due to this peak, I finally took the opportunity to take it the hell out of there without a major loss.  I don't care if I miss more gains. I'm tired of the massive ups and downs from the past 15 years.

markbike528CBX

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Re: Precious Metals
« Reply #658 on: August 03, 2020, 03:25:17 PM »
Top is in.

celerystalks

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Re: Precious Metals
« Reply #659 on: August 03, 2020, 07:35:01 PM »
Top is in.

Top of what? Gold doesnít change its value all that much over time.  The rapid changes in the price of gold lately is caused mostly on speculator expectations of the value of thedollar with gold merely being priced in an ever expanding supply of those dollars.

vand

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Re: Precious Metals
« Reply #660 on: August 04, 2020, 02:59:57 AM »
People love to look at long term averages whilst ignoring what is happening underneath their noses.

Here's a little challenge: go back to the day that you decided you wanted to actively pursue FI. Use that specific start date, and then compare a 100% stock portfolio to a 80/20 stock/gold portfolio.   How did it do?  You see how meaningless "long term averages" can be?

Within my lifetime UK stocks are basically at the same level as they were when I started investing roughly 18 years ago, so with dividends they would roughly have doubled. That's not really a great return over 18 years in an asset whose long term return is supposed to be 10%. Over the same time gold has gone up 5-fold in GBP - that's more like it, and not bad for an asset whose long term return is supposed to be 2% or less.

The point is that we do not live our lives in the long term averages. Sometimes it pays to actually look at what is going on in the world and get on board that trend, despite what long term averages say.

I'm reminded of the tale I heard from an old man reflecting on his regrets in life.. he grew up living next door to a very special girl. He knew that if he married her he would have been happy. But that is not what he did, because  he was young and foolish and couldn't see a good thing when it was right in front of him.  When you are young the averages say that the chances of growing up next door to your life partner are a million to one... but sometimes you have to just doa Han Solo and ignore what the averages say because there is a good thing right there in front of you.

DalioGold10

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Re: Precious Metals
« Reply #661 on: August 04, 2020, 06:12:09 AM »
People love to look at long term averages whilst ignoring what is happening underneath their noses.
.
The point is that we do not live our lives in the long term averages. Sometimes it pays to actually look at what is going on in the world and get on board that trend, despite what long term averages say.


Very good points !
Despite stocks being the best asset class in terms of performance over the long term, you still need to be diversified. Long term may mean even 30-40 years, which is very long by some measures (our lives) but yet not so long if you refer to the investing universe starting in 1800's.

I have always preferred a diversified portfolio with a tilt or embedding current structural changes expected over the next decades, i.e. low interest rates or better said negative returns on bonds, hence today would be better to give up/sell all your long term treasuries holdings.

Gold plays an important part, however, gold is starting to get slightly overvalued IMO. I am not a doom and gloom like Peter Schiff and others alike, i.e. I am not fond of gold but it plays a role in any portfolio.

Depending on your needs, if you are in the RE phase, cash plays an important role to mitigate the SWR risk.

Adapt and adjust.

Nevertheless, stocks remain the engine for growth in any portfolio, be it in accumulation or retirement phases.  It is difficult to be Buffet, even for Buffet in this environment where operating business models have changes and are exponentially changing due to the technological advancement.

BicycleB

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Re: Precious Metals
« Reply #662 on: August 04, 2020, 07:06:22 PM »

Within my lifetime UK stocks are basically at the same level as they were when I started investing roughly 18 years ago, so with dividends they would roughly have doubled. That's not really a great return over 18 years in an asset whose long term return is supposed to be 10%. Over the same time gold has gone up 5-fold in GBP - that's more like it, and not bad for an asset whose long term return is supposed to be 2% or less.


Are these numbers before adjusting for inflation?

The 18 year fact pattern you describe makes me wonder if it would be wise now to have more stock and less gold. If stock has underperformed and gold has overperformed, then stock prices should be low now relative gold, right?

I guess the other part of your post is saying "no, I can tell the trend is going to continue." But how can you tell? If these trends go on for decades but then they change, what happens if you miss the turning point?



vand

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Re: Precious Metals
« Reply #663 on: August 05, 2020, 02:28:00 AM »

Within my lifetime UK stocks are basically at the same level as they were when I started investing roughly 18 years ago, so with dividends they would roughly have doubled. That's not really a great return over 18 years in an asset whose long term return is supposed to be 10%. Over the same time gold has gone up 5-fold in GBP - that's more like it, and not bad for an asset whose long term return is supposed to be 2% or less.


Are these numbers before adjusting for inflation?

The 18 year fact pattern you describe makes me wonder if it would be wise now to have more stock and less gold. If stock has underperformed and gold has overperformed, then stock prices should be low now relative gold, right?

I guess the other part of your post is saying "no, I can tell the trend is going to continue." But how can you tell? If these trends go on for decades but then they change, what happens if you miss the turning point?

I would have bought my first stocks around late 1999/early 2000 when I started my first job and started contributing a tiny sliver of my income towards a pension (just 2% - how little did I know back then). The FTSE 100 traded roughly between 6500-7000 at that time. Today the FTSE is trading at 6100, so it has gone absolutely nowhere in over 20 years even in nominal terms, never mind real terms. Factor in an average ~3.5% dividend yield roughly doubles the nominal return over 20 years..

Yes, it's easy today to look back and point out all the risks with home country bias, but remember this was 20 years ago when the concept of global diversification was much less researched and most pension funds simply went with domestic stocks (they still do, to a large extent). 

The secular trend in gold will continue until enough people take the underlying drivers seriously enough to make long term changes that are fundamentally bad for gold; These changes would include countries running balanced budgets, allowing interest rates to find a more natural market determined equilibrium, and allow capitalism to work in determining winners and losers instead of using their central banks to creating a risk-free investing environment which in turn only creates systemic risk. I see none of those as even a remote possibility for the foreseeable future.

Remember in the back end of the Clinton administration the US actually managed to run a budget surplus for a couple of years? That pretty much coincided with the top of the dotcom boom and the bottom of the gold market, and the direction of public finances has all been in the other way since. Does anyone think the US will run another budgetary surplus any time soon? Or even within their lifetime?
« Last Edit: August 05, 2020, 02:38:52 AM by vand »

v8rx7guy

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Re: Precious Metals
« Reply #664 on: August 05, 2020, 08:33:45 AM »
Gold is up to $2,050/oz.  I finally get a chance to sell mine for a decent profit... I did a lot of buying in the $1,550 - $1,650 range and thought I had made a huge mistake.  Now that I have that chance though, I kind of want to hang on to it!  I guess that's the way gold is.  I think if it hit $2,500 I would pretty strongly consider offloading it.

vand

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Re: Precious Metals
« Reply #665 on: August 05, 2020, 12:52:26 PM »
Gold has closed at a record weekly high as the Dollar clings on by the fingernails to its near decade-long bull market.



If the dollar does head lower over the next few years then I struggle to see any scenario where gold doesn't go much higher.

the Dollar Index failed to hold the uptrend. The odds are now high that the USD will get weaker over the next few years and provide a strong tailwind to gold, commodities and real assets, and also to emerging markets who hold USD denominated debt.

BicycleB

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Re: Precious Metals
« Reply #666 on: August 05, 2020, 02:31:48 PM »

Yes, it's easy today to look back and point out all the risks with home country bias, but remember this was 20 years ago when the concept of global diversification was much less researched and most pension funds simply went with domestic stocks (they still do, to a large extent). 


No worries, wasn't intending to point out anything about home country bias. Was asking questions about price levels.

I see you answered that prices in your returns were unadjusted for inflation (thx for confirmation), and that because the fundamentals you identify as driving your returns are still in place, you are confident that the trends will continue. I have no definite position on this; thanks for the explanation.

ChpBstrd

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Re: Precious Metals
« Reply #667 on: August 07, 2020, 02:11:36 PM »
Goldís price in inflation-adjusted terms is somewhat range-bound and prone to manias as in 1980 and 2011, driven by inflation fears.

https://www.marketwatch.com/story/gold-is-a-foolish-place-to-put-your-money-right-now-if-you-check-the-facts-2020-08-07?mod=home-page

PDXTabs

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Re: Precious Metals
« Reply #668 on: August 07, 2020, 07:32:18 PM »
Goldís price in inflation-adjusted terms is somewhat range-bound and prone to manias as in 1980 and 2011, driven by inflation fears.

https://www.marketwatch.com/story/gold-is-a-foolish-place-to-put-your-money-right-now-if-you-check-the-facts-2020-08-07?mod=home-page

Yup, but look at 1977 and 2001. I've promised myself if it ever gets that low again that I will buy some.

vand

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Re: Precious Metals
« Reply #669 on: August 08, 2020, 11:05:31 AM »
Goldís price in inflation-adjusted terms is somewhat range-bound and prone to manias as in 1980 and 2011, driven by inflation fears.

https://www.marketwatch.com/story/gold-is-a-foolish-place-to-put-your-money-right-now-if-you-check-the-facts-2020-08-07?mod=home-page

I generally like Hulbert, but the analysis he is referencing here is badly flawed and shows why most people still don't understand gold. They treat gold as a simple commodity that has not propensity for increasing its long term value, and so erroneously concludes that we are close to the top of a historic range.

However, the fundamental argument against this is that gold is not just a commodity, it is good money, and the holders of good money are the beneficiaries of long term increases in productivity in the economy and see the purchasing power of their savings increase. After all, this is the primary reason to save - to defer current consumption in preferance for a higher rate of consumption in the future.

see
https://www.youtube.com/watch?v=GnCHmLsV6Ro
https://www.youtube.com/watch?v=l8_wqmsjrsY
https://www.youtube.com/watch?v=Lwnowt6p5O0


A much fairer assessment of current valuation in the cycle here - yes gold is above its long term trend, but not really by enough to suggest that we are near the peak just yet:
https://www.youtube.com/watch?v=0yi6ruuy6yc



Saffron

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Re: Precious Metals
« Reply #670 on: August 14, 2020, 09:00:28 AM »
« Last Edit: August 14, 2020, 09:02:22 AM by Saffron »

appleshampooid

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Re: Precious Metals
« Reply #671 on: August 14, 2020, 11:55:53 AM »
I'm good on gold for now.

I did pick up a couple bags of 40% Kennedy half dollars the other day, SD was running them on sale and the premium over spot worked out to about 5%. Basically all other silver has been in the 10-15% range recently.

Probably they are not very desirable, since 60% copper. Not very efficient. Oh well, already on their way. I'm above my 3% PM target for the moment.
« Last Edit: August 14, 2020, 11:57:45 AM by appleshampooid »


celerystalks

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Re: Precious Metals
« Reply #673 on: August 15, 2020, 12:21:40 AM »
I wonder what all the gold haters are gonna say now:

https://www.google.com/url?sa=t&source=web&rct=j&url=https://fortune.com/2020/08/14/warren-buffett-goldman-sachs-gold-berkshire-hathaway-portfolio-occidental-stock-wells-fargo-jp-morgan-kroger/amp/&ved=2ahUKEwiGzKzDwpzrAhWRsnEKHaisB6QQiJQBMAF6BAgREAw&usg=AOvVaw0bfTMZ4v7wqYCSu50ZDgem&ampcf=1

Buffett obviously has a better investing track record than me.. but iím starting to wonder about him.  He seems to be reactive over the past few years and has made some serious blunders, IMO. buying then quickly selling IBM. The kraft-heinz  write-down. Selling the airlines at the bottom. Selling out of his oil deal in oxy. Buying apple only after it has become one of the largest Companies in the world.  Twiddling his thumbs during the wells fargo fiasco. And most importantly not swinging at any pitches during March 2020. Just buying anything and everything in March,like an S&P ETF, would have produced amazing returns Berkshire's cash pile.

vand

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Re: Precious Metals
« Reply #674 on: August 15, 2020, 01:22:40 AM »
I've been very critical of Buffett in recent months primarily for his reluctance to put his cash to work during the crisis, while also saying that I still think he's a great investor who's just hamstrung now by the size that Berkshire has grown to.

Getting into the gold sector is a seriously radical move on his part. But maybe it shouldn't be that surprising given his contrarian nature.. Buffett isn't the sort of investor who buys something as a hedge, he buys it because he thinks its a great company which is undervalued by the market and can deliver long term outperformance, nd he obviously wouldnt think that would be possible without solid long term fundamentals (ie a strong gold price).

blue_green_sparks

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Re: Precious Metals
« Reply #675 on: August 15, 2020, 07:13:44 AM »
I've been very critical of Buffett in recent months primarily for his reluctance to put his cash to work during the crisis, while also saying that I still think he's a great investor who's just hamstrung now by the size that Berkshire has grown to.

Getting into the gold sector is a seriously radical move on his part. But maybe it shouldn't be that surprising given his contrarian nature.. Buffett isn't the sort of investor who buys something as a hedge, he buys it because he thinks its a great company which is undervalued by the market and can deliver long term outperformance, nd he obviously wouldnt think that would be possible without solid long term fundamentals (ie a strong gold price).
Perhaps he thinks all this zero rate free money being put into distribution will result in a future reckoning.

Buffaloski Boris

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Re: Precious Metals
« Reply #676 on: August 15, 2020, 04:52:55 PM »
I wonder what all the gold haters are gonna say now:

https://www.google.com/url?sa=t&source=web&rct=j&url=https://fortune.com/2020/08/14/warren-buffett-goldman-sachs-gold-berkshire-hathaway-portfolio-occidental-stock-wells-fargo-jp-morgan-kroger/amp/&ved=2ahUKEwiGzKzDwpzrAhWRsnEKHaisB6QQiJQBMAF6BAgREAw&usg=AOvVaw0bfTMZ4v7wqYCSu50ZDgem&ampcf=1

Iím not a gold hater, I just thought it was a rip off as compared to silver.  And I still do. And Iím a happy camper these last few weeks.  But sure, Iíll take a swing.

Thereís a saying that you donít fight the Fed, and I would expect Warren Buffet of all people to understand that. Given that the Fed has embarked on Biblical levels of money printing to protect the interests of the elite, what would we expect him to do? Buy treasuries? Gold is a safe, fairly mainstream bet. Iíd be surprised if he went big on crypto, but not gold.

vand

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Re: Precious Metals
« Reply #677 on: August 17, 2020, 04:43:59 AM »
I wonder what all the gold haters are gonna say now:

https://www.google.com/url?sa=t&source=web&rct=j&url=https://fortune.com/2020/08/14/warren-buffett-goldman-sachs-gold-berkshire-hathaway-portfolio-occidental-stock-wells-fargo-jp-morgan-kroger/amp/&ved=2ahUKEwiGzKzDwpzrAhWRsnEKHaisB6QQiJQBMAF6BAgREAw&usg=AOvVaw0bfTMZ4v7wqYCSu50ZDgem&ampcf=1

Iím not a gold hater, I just thought it was a rip off as compared to silver.  And I still do. And Iím a happy camper these last few weeks.  But sure, Iíll take a swing.

Thereís a saying that you donít fight the Fed, and I would expect Warren Buffet of all people to understand that. Given that the Fed has embarked on Biblical levels of money printing to protect the interests of the elite, what would we expect him to do? Buy treasuries? Gold is a safe, fairly mainstream bet. Iíd be surprised if he went big on crypto, but not gold.

Fair value in my estimate is around GSR 62-68, so at current price of ~72 it's almost right there.  Obviously it's been a better buy for most of the last few years as the GSR has sat at 80+, even 90+ for quite a few months, but as ever when something's on sale most people aren't interested in it..

dougules

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Re: Precious Metals
« Reply #678 on: August 17, 2020, 10:17:56 AM »
While it is a shift to see Warren Buffett get involved with gold, people seemed to have missed the point that he has not bought actual gold.  He bought stock in a mining company.  That's quite a bit different than just buying the lifeless metal itself.   

celerystalks

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Re: Precious Metals
« Reply #679 on: August 17, 2020, 07:32:57 PM »
While it is a shift to see Warren Buffett get involved with gold, people seemed to have missed the point that he has not bought actual gold.  He bought stock in a mining company.  That's quite a bit different than just buying the lifeless metal itself.

Buying an ounce of gold is an ounce today and an ounce forever.

It is more volatile as well as risky to invest in a mining company. They may or may not produce the anticipated amount if gold.  The price of gold may or may not make the mining activity profitable.  The management may or may not be trustworthy.

Mark Twain defined a gold mine as a hole in the ground with a liar in it.  Not much has changed since his time.

dougules

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Re: Precious Metals
« Reply #680 on: August 19, 2020, 03:00:56 PM »
Buying an ounce of gold is an ounce today and an ounce forever.

Exactly.  That's what makes it a store of value and not an investment.  It makes no return.  It just sits there. 

Quote
It is more volatile as well as risky to invest in a mining company. They may or may not produce the anticipated amount if gold.  The price of gold may or may not make the mining activity profitable.  The management may or may not be trustworthy.

Exactly.  That's what makes it an investment.  You take a risk to get a reward.  The mining industry may or may not be a good investment, but it is still expected to produce something to sell for an actual return.  Good investment or bad investment, he's buying stocks the same as he always has, not lumps of metal. 

Cabaka

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Re: Precious Metals
« Reply #681 on: August 20, 2020, 12:54:54 PM »


pure speculation on my part, but I think silver is going past 30 within the next 2 yearsl I got a small percent in SLV i'm just going to hold and see if it does.

Radagast

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Re: Precious Metals
« Reply #682 on: August 23, 2020, 07:36:52 PM »
I wonder what all the gold haters are gonna say now:

https://www.google.com/url?sa=t&source=web&rct=j&url=https://fortune.com/2020/08/14/warren-buffett-goldman-sachs-gold-berkshire-hathaway-portfolio-occidental-stock-wells-fargo-jp-morgan-kroger/amp/&ved=2ahUKEwiGzKzDwpzrAhWRsnEKHaisB6QQiJQBMAF6BAgREAw&usg=AOvVaw0bfTMZ4v7wqYCSu50ZDgem&ampcf=1

If anyone on the internet only ever makes one call, and it is right, it is imperative that they brag about it for ever and ever :D

From the undervalued stock thread in 2015:
Barrick Gold has a price-to-book ratio of 0.78 and a lot of great assets. The price amazingly was $5.94 a few weeks ago, which was like a 30 year low (of course now well over $7, for a 23% gain).

Not that I'm buying.
(I did end up buying, but went for an ETF instead of one company, and not until February 2016, and have been making regular purchases per an allocation plan since)


ChpBstrd

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Re: Precious Metals
« Reply #683 on: August 31, 2020, 08:41:43 PM »
This should kick the hornet nest a little...


celerystalks

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Re: Precious Metals
« Reply #684 on: August 31, 2020, 08:46:10 PM »
This should kick the hornet nest a little...

How so?

ChpBstrd

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Re: Precious Metals
« Reply #685 on: September 01, 2020, 02:18:50 PM »
This should kick the hornet nest a little...

How so?
It implies that the modern run-up in the price of gold (in an era of low inflation) is related to the availability of the GLD ETF.

celerystalks

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Re: Precious Metals
« Reply #686 on: September 01, 2020, 02:42:30 PM »
This should kick the hornet nest a little...

How so?
It implies that the modern run-up in the price of gold (in an era of low inflation) is related to the availability of the GLD ETF.

And?

Iím not sure I draw the same conclusions from the chart..  Also, I still fail to see what the point you are trying to make is? Is it that you think gold is therefore overvalued? That the ETF is temporary and will go away thereby causing a reversion in the market when it does? That ETF ownership isnít really ownership, just more paper promises? That too much gold is leaving the physical market towards to ETF custodianís horde making gold seem more scarce?

ChpBstrd

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Re: Precious Metals
« Reply #687 on: September 01, 2020, 04:07:19 PM »
This should kick the hornet nest a little...

How so?
It implies that the modern run-up in the price of gold (in an era of low inflation) is related to the availability of the GLD ETF.

And?

Iím not sure I draw the same conclusions from the chart..  Also, I still fail to see what the point you are trying to make is? Is it that you think gold is therefore overvalued? That the ETF is temporary and will go away thereby causing a reversion in the market when it does? That ETF ownership isnít really ownership, just more paper promises? That too much gold is leaving the physical market towards to ETF custodianís horde making gold seem more scarce?

Much of the price of gold is accounted for by the way it is packaged, marketed, and advertised to retail investors.

Telecaster

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Re: Precious Metals
« Reply #688 on: September 01, 2020, 08:51:10 PM »
This should kick the hornet nest a little...

How so?
It implies that the modern run-up in the price of gold (in an era of low inflation) is related to the availability of the GLD ETF.

I had a different interpretation.  Basically, if you don't buy gold when the price is low, you are in for decades of pain.  The price is not currently low. 

Radagast

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Re: Precious Metals
« Reply #689 on: September 01, 2020, 09:45:28 PM »
This should kick the hornet nest a little...

How so?
It implies that the modern run-up in the price of gold (in an era of low inflation) is related to the availability of the GLD ETF.

And?

Iím not sure I draw the same conclusions from the chart..  Also, I still fail to see what the point you are trying to make is? Is it that you think gold is therefore overvalued? That the ETF is temporary and will go away thereby causing a reversion in the market when it does? That ETF ownership isnít really ownership, just more paper promises? That too much gold is leaving the physical market towards to ETF custodianís horde making gold seem more scarce?

Much of the price of gold is accounted for by the way it is packaged, marketed, and advertised to retail investors.
I expect that within my lifetime a gold ďetfĒ will be discovered to be holding fractional reserves, like a very tiny fraction. In the ensuing panic several more will also be discovered to be holding fractional reserves. To sit on an untraceable metal, getting paid 0.2% of its value per year, hiring your own auditors, with no effective government oversight, you have to be pretty dumb to do anything else. Gold prices will quickly assume their non-etf-world price range for a few decades. Most likely to occur during a gold bubble when everyone is pouring money in and not asking questions.

vand

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Re: Precious Metals
« Reply #690 on: September 02, 2020, 03:27:28 AM »
This should kick the hornet nest a little...

How so?
It implies that the modern run-up in the price of gold (in an era of low inflation) is related to the availability of the GLD ETF.

And?

Iím not sure I draw the same conclusions from the chart..  Also, I still fail to see what the point you are trying to make is? Is it that you think gold is therefore overvalued? That the ETF is temporary and will go away thereby causing a reversion in the market when it does? That ETF ownership isnít really ownership, just more paper promises? That too much gold is leaving the physical market towards to ETF custodianís horde making gold seem more scarce?

Much of the price of gold is accounted for by the way it is packaged, marketed, and advertised to retail investors.

I find this a rather hillarious point of view taken from a default position of "Equities should de-facto get 100% of coverage, and anything else should consider itself lucky to get a mention."

In the UK we have a national obsession with property; let's just have a look at how property has permeated the public conscious by the endless TV shows down the years:

https://www.independent.co.uk/arts-entertainment/tv/news/channel-4-now-has-12-property-shows-and-threatening-more-a6879361.html

I think gold has rather a long way to go to get to even 1/100th of this level of coverage.

MustacheAndaHalf

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Re: Precious Metals
« Reply #691 on: September 02, 2020, 05:11:53 AM »
I expect that within my lifetime a gold ďetfĒ will be discovered to be holding fractional reserves, like a very tiny fraction. In the ensuing panic several more will also be discovered to be holding fractional reserves. To sit on an untraceable metal, getting paid 0.2% of its value per year, hiring your own auditors, with no effective government oversight, you have to be pretty dumb to do anything else. Gold prices will quickly assume their non-etf-world price range for a few decades. Most likely to occur during a gold bubble when everyone is pouring money in and not asking questions.
You're claiming they would be dumb if they don't want to spend years in prison, for committing fraud and theft?

Gold bars are not "untraceable", but rather have serial numbers and descriptions.  The ETF is a trustee that has it's gold bars held in a custodian bank.  So the fraud can't just involve the ETF, but has to include the custodian bank.  Then there's the auditors, which physically inspect the gold... and institutional investors who redeem overvalued shares of GLD and expect to receive $18+ million in gold when they redeem 100,000 shares of GLD ETF.

Seems very unlikely to me, provided the ETF and custodian bank are separate entities.  When the money and custodianship are concentrated in one place (like Madoff Securities), trouble is far more likely.

Here's some FAQ I went through with the GLD ETF (I don't own shares, I was just curious):

https://www.spdrgoldshares.com/usa/faqs
"Under the Trust's custody agreements with the Custodian, the Trustee and World Gold Trust Services, LLC, the Sponsor of the Trust, World Gold Trust Services, LLC (the ďSponsorĒ) and its representatives visit and inspect the Trust's gold held in the Custodianís vault facility.  The Trust's independent auditors audit the gold holdings in the vault as part of their annual audit of the financial statements of the Trust."
"The gold bars in an allocated account are specific to that account and are identified by a list which shows, for each gold bar, the refiner, assay or fineness, serial number and gross and fine weight."

celerystalks

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Re: Precious Metals
« Reply #692 on: September 02, 2020, 08:54:05 AM »
This should kick the hornet nest a little...

How so?
It implies that the modern run-up in the price of gold (in an era of low inflation) is related to the availability of the GLD ETF.

And?

Iím not sure I draw the same conclusions from the chart..  Also, I still fail to see what the point you are trying to make is? Is it that you think gold is therefore overvalued? That the ETF is temporary and will go away thereby causing a reversion in the market when it does? That ETF ownership isnít really ownership, just more paper promises? That too much gold is leaving the physical market towards to ETF custodianís horde making gold seem more scarce?

Much of the price of gold is accounted for by the way it is packaged, marketed, and advertised to retail investors.

Ok. Thanks for clearing it up. Consider the hornets nest kicked... ::yawn::

BicycleB

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Re: Precious Metals
« Reply #693 on: September 02, 2020, 04:19:11 PM »

Ok. Thanks for clearing it up. Consider the hornets nest kicked... ::yawn::

Bzzz!  :)


https://www.spdrgoldshares.com/usa/faqs
"Under the Trust's custody agreements with the Custodian, the Trustee and World Gold Trust Services, LLC, the Sponsor of the Trust, World Gold Trust Services, LLC (the ďSponsorĒ) and its representatives visit and inspect the Trust's gold held in the Custodianís vault facility.  The Trust's independent auditors audit the gold holdings in the vault as part of their annual audit of the financial statements of the Trust."
"The gold bars in an allocated account are specific to that account and are identified by a list which shows, for each gold bar, the refiner, assay or fineness, serial number and gross and fine weight."

The question of whether all the gold is real because audited is quite interesting. I wonder how thorough the auditors' procedures are. Do they skillfully weigh a big carefully selected sample of bars to verify their authenticity, or just compare a small sample of the ID numbers to what's on the list? Are there reliable procedures for ensuring that sneaky replacements don't occur between weighings?

It seems likely that the procedures exist and are reasonable, yet as Radagast points out, the incentive to overcome the safeguards is huge. It seems like a sturdy rock (bank vault security, audits) being tapped at by a very powerful force (greeeeeeed!). Seems like greed might win from time to time, maybe. Hmmm.
« Last Edit: September 02, 2020, 04:20:54 PM by BicycleB »

hodedofome

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Re: Precious Metals
« Reply #694 on: September 02, 2020, 09:38:40 PM »
They have micro gold futures now, no need to buy GLD if you donít want to.

Iím 100% tech stocks but that hasnít stopped me from buying a few gold and silver futures. A trend is a trend and I can see metals going much higher from here.

When we get into a film on tech bubble Iíll be eventually switching my strategy to a leveraged permanent portfolio but only own the assets that are going up. I wonít hold the stock portion if itís going down, for example.

Radagast

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Re: Precious Metals
« Reply #695 on: September 02, 2020, 11:12:21 PM »
I expect that within my lifetime a gold ďetfĒ will be discovered to be holding fractional reserves, like a very tiny fraction. In the ensuing panic several more will also be discovered to be holding fractional reserves. To sit on an untraceable metal, getting paid 0.2% of its value per year, hiring your own auditors, with no effective government oversight, you have to be pretty dumb to do anything else. Gold prices will quickly assume their non-etf-world price range for a few decades. Most likely to occur during a gold bubble when everyone is pouring money in and not asking questions.
You're claiming they would be dumb if they don't want to spend years in prison, for committing fraud and theft?

Gold bars are not "untraceable", but rather have serial numbers and descriptions.  The ETF is a trustee that has it's gold bars held in a custodian bank.  So the fraud can't just involve the ETF, but has to include the custodian bank.  Then there's the auditors, which physically inspect the gold... and institutional investors who redeem overvalued shares of GLD and expect to receive $18+ million in gold when they redeem 100,000 shares of GLD ETF.

Seems very unlikely to me, provided the ETF and custodian bank are separate entities.  When the money and custodianship are concentrated in one place (like Madoff Securities), trouble is far more likely.

Here's some FAQ I went through with the GLD ETF (I don't own shares, I was just curious):

https://www.spdrgoldshares.com/usa/faqs
"Under the Trust's custody agreements with the Custodian, the Trustee and World Gold Trust Services, LLC, the Sponsor of the Trust, World Gold Trust Services, LLC (the ďSponsorĒ) and its representatives visit and inspect the Trust's gold held in the Custodianís vault facility.  The Trust's independent auditors audit the gold holdings in the vault as part of their annual audit of the financial statements of the Trust."
"The gold bars in an allocated account are specific to that account and are identified by a list which shows, for each gold bar, the refiner, assay or fineness, serial number and gross and fine weight."
I guess I donít see how any of that is really relevant. A company whose employee was injured may have had a detailed safety plan clearing listing the mandatory steps taken to prevent that exact injury. I bet Enron had some pretty strong anti-fraud policies published. I can already think of several ways around all of your objections, and if I was on a dedicated team of professionals who would get paid $100,000,000 if successful I bet I could think of a whole lot more. Further, this wouldnít really even be an out of sample occurrence because both the histories of humans and precious metals are full of these things.

When you say very unlikely, how much exactly is that? 0.5 chance of it being found per fund per year? That seems on the low end of history but I basically agree. That means any given fund has a 50/50 chance of being effected in any 100 year period. If there are ten funds, that to me implies a 50/50 chance of one in any 10 years. Of course I expect these things would run together, and the circumstances that cause one fund to turn shady would likely pressure others as well, and once one had been caught the others would be looked at closely as well.

ChpBstrd

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Re: Precious Metals
« Reply #696 on: September 04, 2020, 01:02:17 PM »
^ I see a lot of psychological searching for certainty in a world where certainty is lacking. Gold bugsí frequent references to goldís tangibility, long history, and possible use if all else fails are also attempts to nail down externalities outside our control.

MustacheAndaHalf

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Re: Precious Metals
« Reply #697 on: September 05, 2020, 12:33:38 AM »
I expect that within my lifetime a gold ďetfĒ will be discovered to be holding fractional reserves, like a very tiny fraction. In the ensuing panic several more will also be discovered to be holding fractional reserves. To sit on an untraceable metal, getting paid 0.2% of its value per year, hiring your own auditors, with no effective government oversight, you have to be pretty dumb to do anything else. Gold prices will quickly assume their non-etf-world price range for a few decades. Most likely to occur during a gold bubble when everyone is pouring money in and not asking questions.
You're claiming they would be dumb if they don't want to spend years in prison, for committing fraud and theft?

Gold bars are not "untraceable", but rather have serial numbers and descriptions.  The ETF is a trustee that has it's gold bars held in a custodian bank.  So the fraud can't just involve the ETF, but has to include the custodian bank.  Then there's the auditors, which physically inspect the gold... and institutional investors who redeem overvalued shares of GLD and expect to receive $18+ million in gold when they redeem 100,000 shares of GLD ETF.

Seems very unlikely to me, provided the ETF and custodian bank are separate entities.  When the money and custodianship are concentrated in one place (like Madoff Securities), trouble is far more likely.

Here's some FAQ I went through with the GLD ETF (I don't own shares, I was just curious):

https://www.spdrgoldshares.com/usa/faqs
"Under the Trust's custody agreements with the Custodian, the Trustee and World Gold Trust Services, LLC, the Sponsor of the Trust, World Gold Trust Services, LLC (the ďSponsorĒ) and its representatives visit and inspect the Trust's gold held in the Custodianís vault facility.  The Trust's independent auditors audit the gold holdings in the vault as part of their annual audit of the financial statements of the Trust."
"The gold bars in an allocated account are specific to that account and are identified by a list which shows, for each gold bar, the refiner, assay or fineness, serial number and gross and fine weight."
I guess I donít see how any of that is really relevant. A company whose employee was injured may have had a detailed safety plan clearing listing the mandatory steps taken to prevent that exact injury. I bet Enron had some pretty strong anti-fraud policies published. I can already think of several ways around all of your objections, and if I was on a dedicated team of professionals who would get paid $100,000,000 if successful I bet I could think of a whole lot more. Further, this wouldnít really even be an out of sample occurrence because both the histories of humans and precious metals are full of these things.

When you say very unlikely, how much exactly is that? 0.5 chance of it being found per fund per year? That seems on the low end of history but I basically agree. That means any given fund has a 50/50 chance of being effected in any 100 year period. If there are ten funds, that to me implies a 50/50 chance of one in any 10 years. Of course I expect these things would run together, and the circumstances that cause one fund to turn shady would likely pressure others as well, and once one had been caught the others would be looked at closely as well.
Gold ETFs are not Enron.

When you say very unlikely, how much exactly is that? 0.5 chance of it being found per fund per year? That seems on the low end of history but I basically agree.
You're agreeing with a statistic you made up?

Why aren't you researching the central claim of your conspiracy theory?

vand

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Re: Precious Metals
« Reply #698 on: September 09, 2020, 03:54:04 AM »
You can't make some of this up:

Quote
"If [Elon Musk] mines all the gold on the asteroids, all of a sudden gold is worthless," he said. "And I think he will."

"Thereís billions of dollars of gold floating in asteroids around this planet," said Tyler Winklevoss, explaining that, on the other hand, there will only ever be 21 million bitcoin tokens.

https://www.forbes.com/sites/billybambrough/2020/08/14/winklevoss-twins-tell-bar-stools-dave-portnoy-to-pick-bitcoin-over-gold-due-to-elon-musks-space-mining/#1034c7974262


Gold, TSLA, Bitcoin.. two of these are in a bubble.

big_owl

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Re: Precious Metals
« Reply #699 on: September 12, 2020, 10:02:28 AM »
You can't make some of this up:

Quote
"If [Elon Musk] mines all the gold on the asteroids, all of a sudden gold is worthless," he said. "And I think he will."

"Thereís billions of dollars of gold floating in asteroids around this planet," said Tyler Winklevoss, explaining that, on the other hand, there will only ever be 21 million bitcoin tokens.

https://www.forbes.com/sites/billybambrough/2020/08/14/winklevoss-twins-tell-bar-stools-dave-portnoy-to-pick-bitcoin-over-gold-due-to-elon-musks-space-mining/#1034c7974262


Gold, TSLA, Bitcoin.. two of these are in a bubble.

Lmfao.  Elon is going to mine gold from asteroids.   Is that after he actually delivers on self driving cars?   Or after he goes to Mars?   We haven't even been able to get to the moon in 50yrs.   There's a sucker born every minute.