Gold: "Tumbling Tumbleweed"

[Teach]

Just the other day I was watching re-runs from “Tales of Wells Fargo,” Cliff Robertson. (When I was a young man, I was a big “Western” movie-fan). In the "Wells Fargo" episode I was watching, there was tumbleweed being blown in one direction and then another. That, in my opinion, is my current analogy as to the status of gold and silver stocks.

As I continue, as tumbleweed is at the “beck and call” of prevailing winds and their velocity, gold, in a manner of speaking, is at the “beck and call” of financial data and official government pronouncements.

Take for example the Fed’s recent decision to "stand pat" and keep interest rates at current levels. On the face of it, that appeared good for both gold and silver. But wait, at the subsequent press conference some half-hour later, Chair Powell gave an indication that a possible 25 basis-points hike is still on the table for the Fed’s November meeting. In fact, any talk of the easing of interest rates - good for gold - appears to be, at least at this point, a non-starter.

Yes, just like that tumbleweed that’s being blown all over the place by the winds on the open prairie, gold, analogously, is at the mercy of financial data and financial decision-making.

I might mention, at this point, that there’s another “fly in the ointment,” the cost of gasoline (fuel). That’s a big part of a mining company's budgetary consideration. If the price goes up, that "eats" into the bottom-line. I would think this would be particularly true of “junior" mining companies.

Yet, as I continue, I do hold about 5% of my portfolio in gold and silver. As my Italian cousin would say, “pazzo!” I don’t think so.

As I’ve said over and over again, there’s no telling when an unexpected calamity could take place. The world, as cited in other posts, is in a very precarious place. I liken it to pre-World War I Europe.

For example, recently, the leader of the the country of Poland, Duda, likened his country’s aid to Ukraine to being like helping a potential drowning victim, i.e., the rescuer could end up becoming the victim (Poland).

Furthermore, on this matter, I believe what President Duda is not taking into account is that, like dominoes, if Ukraine falls to Russia, the NATO nations, not unlike post World War II’s “Iron Curtain," could very well be vulnerable to Russian aggression. It certainly appears that that approach is in Putin’s mind-set.

Finally, yes, I continue to hold gold. And yes, it is at "the beck and call" of financial data and governmental proclamations, But, just in case, I keep my “insurance policy” near, because if, heaven forbid, a catastrophic event occurs, gold might well see an exponential rise. Yes, like that tumbleweed in those "old Westerns," gold can be blown in one direction and then another, but I still consider my hedge against disaster.

[Tor Ekman]

This is the thing I’ve never understood about gold: If the sh*t really hits the fan, what good is holding physical gold gonna do you? Happy to hear explanations.

[Teach]

I do not own or hold physical gold — ask Bob Menendez — that is, except for my 1960 high school class-ring (it cost $18.75) and a few pieces of jewelry that are in a safe-deposit box. No bars, no coins, no nuthin’. Yes, I do own shares of publicly-traded gold and silver stocks. That holding, as stated, amounts to about 5% of my entire portfolio (proportionately, a meer pittance).

Let me state, unequivocally, at this juncture, that I’m not shillin’, not touting, nor advising anyone when it comes to precious metals, nor do I receive compensation, in any form, from anyone connected with the gold and silver industry. In have no vested interest, that is, except to offer my opinion on precious metals.

That opinion is based on over 40 years of owning precious metals’ stocks. Let me hereby state my firm and abiding belief that when it comes to investing: everyone’s a “free agent.” I would be the last person to advise anyone on their financial choices. One economics course in college doesn’t make me a financial guru.

At this point, let me affirm that I do believe that there is a place for precious metals in one’s own portfolio. Gold and silver, generally-speaking, act in an inverse manner to the general market, i.e., Dow Jones, etc.

Moreover, my overriding belief is that when it comes to investments, one should be diversified. That can include stocks and bonds (currently going up, precipitously); real estate, pensions, social security, even collectables, e.g., artwork, stamps, coins, baseball cards, etc., and yes, exposure to gold and silver.

In that vein, I believe that the more oars you have in the water - of varying sizes - the better you are at keeping yourself afloat should the: “sh*t hit the fan."

As cited, gold and silver can be part of that strategy, an overall strategy, an “insurance policy.” Yes, in a manner of speaking, “I’m paying premiums,” just as I do with my own insurance policies, e.g., home, health, auto, etc. It is a "just-in-case" strategy.

Furthermore, life, as Shakespeare once described it, usually, "seeks its petty pace from day to day," but sometimes, when we least expect it, a calamitous event can occur.

For example, how many Americans, when it occurred, expected the attack on Pearl Harbor on December 7, 1941? I don’t imagine there were too many. Frankly, it was shocking, like someone unexpectedly dousing you with cold bucket of water.

Further, I wonder what it would have been like to live in Weimar Germany in the early-1920s. Your currency is virtually worthless, or even here in America during the American Revolution when the expression “Not Worth A Continental!" (Continental currency) was frequently heard.

It’s in those just-in-case, out-of-the-blue scenarios that I would appreciate that I own gold and silver stocks.

Tangentially, as I mention silver, unlike gold, "the white metal" has several industrial uses, not the least of which is in burgeoning solar panels industry (photovoltaics). In that light, I believe silver is worthy of consideration.

Finally, I personally believe that there is a place for gold and silver, but it’s your call. Your choice.

Yet, in concluding, I freely admit that gold, as a hedge against inflation, has lost its luster from bygone years. Today there are alternatives: TIPS, digital, ETF’s, etc. that can be used in place of gold as “a hedge.”

In summation, how you approach all this, i.e., precious metals, is a personal choice. Yet in closing, one of the main reasons for my ownership of gold and silver shares is in the name of the overarching theme: diversification.