Gold has been a safe haven for literally thousands of years.
But how effective is it as a “hedge”? A hedge is an asset that tends to rise when others fall. For example, an investor holding common stocks might find it advantageous to hold some gold too, since it has historically been strong during the worst stock market crashes.
Let’s have some fun… I grew up in the Johnny Carson era, and saw lots of funny episodes and comedians over the years.
One of my favorite things was when he’d say something like “She is so fat…” and the audience would scream out “how fat is she?”
The Millennial or Gen-Z crowd may hear that setup from other comedians today, but Johnny Carson’s show was the father of it.
And by most measures, he has been wildly successful. Tesla orders hit a record 97,000 vehicles globally in the third quarter (not to mention 250,000 preorders for the new CyberTruck). The stock has more than doubled since May 1. And you might recall Mike Maloney is a big fan of Tesla cars. But there’s something you may not know about Elon Musk. He won't admit it publicly. Neither will most “green” company CEOs. But it’s a reality for all of them. They desperately need silver.
Silver mines aren’t pulling the same amount of metal out of the ground as they used to, which means less and less silver is coming to market. Why is less silver coming out of the ground? There are a number of reasons, but there’s one in particular that has sidestepped the notice of most investors, and it may surprise you to find out just how bad the situation has gotten. Let’s look at that reason and what it means for you...
I was stupefied at what I was reading… A Bloomberg article earlier this month reported that JP Morgan and Citibank were significantly reducing their gold positions or closing them out entirely. Based on the article, it seems they made this decision based on the flimsiest of changes in the market:
A textbook in my Master of Psychology program theorized that most things in life come down to core drives—food, shelter, sex, etc. Throw in Freud’s pain and pleasure principals and this is supposedly what drives everything we do. We had a good time poking fun of simplistic theories as to what motivates people. Human emotions and motivations are complex. Except when it comes to money.
I know someone who is very good at technical analysis. So good, in fact, he’s a multi-millionaire primarily from trading via technical analysis. His name is Dominick Graziano, and we’ve become friends over the years. Despite our friendship, he absolutely refuses to tell me what I want to hear (gold’s going through the roof!). So I know when I get a chart from him that it will be dispassionate and solely about a trade he thinks will make him money. I also know I should probably pay attention to what he has to say, because he’s been right a whole lot more than he’s been wrong.
It happened with little fanfare, with virtually no reporting by the mainstream press. But this development signaled that one of the biggest gold-buying entities sees a growing need to own gold right now. Not only does it mean they will continue to buy, but their buying lends long-term support to the gold price. Here’s what’s happening and how it impacts the gold market going forward…
A lot of readers liked our article on how much cash could flood the gold market once institutional investors start buying. Now it’s time to look at silver. And as most readers know, the silver market is much smaller than gold, meaning it could be easily overwhelmed—much more than gold—if these investors begin to take interest.
I once asked my institutional investor friend, who used to work at Goldman Sachs and has been a gold owner for many years, what would make him buy more bullion. Without hesitation he said, “When the price breaks out.” Well, as is clear to the world, gold has broken out of its long-term trading range. My friend is not alone in this sentiment of waiting to buy an investment until it’s rising. Institutional advisors, brokers and managers sit on the sidelines until a dormant asset class comes alive and establishes an uptrend— then they jump in.