Precious metals have a fundamental problem the world over. For thousands of years, humans have sought the ores and minerals needed to extract materials that have been useful to them. These range from sand, through oil, to gold, aluminum, iron, and various other metals. Now man has reached the point where finding natural resources has become much more complicated – all the low-hanging fruit has been picked.
Drones and Robots used to sound like concepts from Steven Spielberg and George Lucas' minds. Now, not only is it ordinary to see flying cameras above you when walking in a park, these devices are already proving their potential as major contributors to business and everyday life. Covid-19 limits human contact and this is accelerating the adoption and development of robots and drones.
Elections. Inflation. Wildfire. Earthquake. Pandemic. International tension. We are starting to get a lot of calls from clients asking for suggestions on what to do with their investment to make sure they weather these economic, political, and natural disasters.
Here we are. Election season. As if that is not enough, there’s this stimulus chaos, airline bailout struggle, and the ever present Covid19. Optimism over more federal fiscal aid has pushed the stock market and gold higher at the end the week.
We have good news and bad news. Good news? The IMF predicted on Tuesday that the world economy will shrink by 4.4% in 2020. Bad News?..
SINCE THE DAYS OF THE ancients, gold has been a symbol of wealth. Kings, queens, emperors, rulers, and celebrities continue to use gold as a symbol of fortune and glamor. Perhaps it is this precise use that’s turning people away from gold investments. Even while billionaires, the latest of which is Buffett, show their faith in gold, many are still doubting it.
Gold is more appropriately compared to the US dollar. Like the US dollar, gold is a medium of exchange that is accepted around the world. Like gold, the US dollar pays no dividend.
Gold pays no dividends, unlike stocks. That’s a reason some investors reject gold as an investment. The comparison is faulty.
Since President Nixon closed the gold window in August of 1971, the price of gold has increased more than 37-fold. From a price of $40.65 at month-end August 1971, gold has risen to $1,528 today.
Warren Buffett has long been critical of gold as an investment. He once said it “has no utility” and that the “magical metal” is no match for “American mettle.” He also said, “Anyone watching from Mars would be scratching their head”, over how we value gold, but he just acquired nearly 21 million shares of Barrick Gold worth $563 million.