Gold Is The Place To Be... Or Is It?

Dear Reader,

Just as we’ve been forecasting for months now, gold continues to make new highs almost on a daily basis. 

Even with the tariff tantrum doing to the markets what South Park’s Fishstick episode did to Kanye West's sanity, gold has rebounded to $3200 and onwards.

More and more, the talking heads of the financial world are starting to fall in line. 

Liu Yuxuan, a Shanghai-based precious metal researcher at Guotai Jun’an Futures Co, distilled the sentiment in an interview with Bloomberg yesterday

“Gold is the best place to be in the market now. The unprecedented trade tension has deepened the distrust of US dollar, intensifying the demand for other safety assets.”

What Happened To Buying Low?

With opinions like this now standard most everywhere in the financial press, it’s no surprise that investors are doubling and tripling down on their exposure to gold in whatever form suits them. 

My job is to tell you to stop right now, before things get ugly. 

Yes, gold is the oldest method for storing value known to man and yes, it’s also the most popular instability hedge, but at $3200 an ounce, it’s also trading about as high as it’s ever traded. 

Almost, but not quite.

“Huh?” may be your knee jerk response to that statement. 

Allow me to explain. 

While gold has indeed never been this high in terms of raw dollar value, when looking at inflation-adjusted prices, there was one moment in history, more than 45 years ago, where it traded marginally higher — for a few days. 

Look What Happened Last Time Gold Traded Above $3000

Back in January of 1980, gold briefly traded at $850/ounce — that’s $3450/ounce in today’s money. 

But it’s not so much the price that needs examination, rather what came after. 

Gold prices collapsed, spectacularly, just weeks after this milestone was reached and stayed down for close to two decades. 

It’s now been four and a half decades since that moment, and gold investors who bought at that top — and there were plenty — have still not recouped their investment. 

Think about that, and now think about what the mainstream financial press is telling you to do today. 

They’re telling you to buy high with the expectation that gold will either continue to soar, or at the very least, slightly beat inflation to make it a viable hedge. 

With every dollar gold gains in value today, the likelihood of either of those outcomes coming to pass becomes smaller and smaller. 

What If There Was Another Precious Metal That Did Everything Gold Does?

There is, however, an alternative that’s being overlooked by the press and by retail investors alike. 

Gold’s little brother, silver, is currently trading at just above $31/ounce. 

That’s $17/ounce less than it traded back in 2011 on the heels of the Great Recession. Adjusted for inflation, it’s lost more than 50% of its value since those post collapse days. 

Silver, like gold, is valued for its beauty and its scarcity. It’s used in jewlery and flatware and also like gold, has become a very important technology metal to boot, with almost half of today’s demand coming from industry. 

Unlike gold, however, silver isn’t typically recovered from old smart phones, laptops and tablets after their owners discard them. 

It’s too cheap. Recovery is too expensive. It’s easier to just buy more. 

Because of this dynamic, silver is a vanishing resource, with as much as 1500 tons of the material being thrown away every single year. 

Silver Is Disappearing

We depend on it. Without it, none of our 21st century technological conveniences would exist. There would be no wireless internet. No solar panels. No high performance semiconductors. 

And yet, the gold to silver price ratio, which now stands at more than 100 to 1, has almost never been higher, at any point in recorded history. 

What does that tell you?

The conclusion makes itself… Gold’s popularity is its biggest drawback. If you want a true hedge–an underbought, speculator-free investment vehicle to protect your wealth against the forces of inflation and geopolitical chaos–silver is the obvious choice. 

There are, of course, a number of ways one can get into silver without going out and buying bars, and for the last few months, I’ve been tracking one of the most interesting concepts I’ve ever encountered. 

This is a company that’s pioneering silver recovery from a source that nobody else has been able to exploit. 

A Silver Producer Like No Other

This isn’t a miner, to be clear, but an extraction technology company with its eyes on a resource worth around $8B just in the U.S. alone. 

I won’t get into the details here because that’s material for a whole separate article, but the important takeaway is that nobody else has access to this resource because of the novel technology required to exploit it. 

This is perhaps a time when silver is the most irrationally underbought commodity in the industrialized world, with the only potential exception being lithium. 

Bottom line: Don’t blindly follow the crowd because for every ounce of gold, or share of a gold producer bought, there is somebody cashing in on the other end. 

If you want to be selling for a profit tomorrow, you have to buy today, before the headlines. 

Get the rest of the story, with all the details and facts, right here.