Yesterday, I surveyed 17 brokers. I asked all of them if they could find me an undervalued gold play to position with immediately.
In 2010, brokers used to call me, not the other way around. They would send me private placement opportunities every other day, and there was a sense of urgency in the air. Investors were hyped-up, so much so that my broker once called to tell me that there were 11 people, who were willing to buy my subscription agreement for a private placement I was about to get included in.
Those were the days of great promise for the “fear trade” as the world was convinced that QE would trigger hyperinflation.
Mining stocks boomed, and gold hit $1,925 per ounce, but by 2011, it was becoming obvious that inflation was not the problem because the economy was only slowly recovering, not spiraling out of control.
Here’s the thing, though, inflation usually occurs late in the cycle, not early, as many assumed.
The 2010-2011 gold stocks rally was an anomaly, not a well-timed bull market. In 2008, the mining sector dropped so much that 2010-2011 was a reversion to the mean, which ended up becoming a bubble.
The inflation scare of the post-Great Recession era is behind us. For eight years, we haven’t seen it creeping up, so most people have been accustomed to low inflation. Heck, my broker just told me to forget all about gold.
What does this all mean?
Between China and the U.S., economic activity is hitting full capacity again, so commodities will begin to play a bigger role, as a percentage of the cost to create products. It’s already happening, since I went over the financials of eight Fortune 500 companies, who are reporting rising costs.
And, the economy isn’t slowing down yet. In fact, real estate is being constructed, roads are being paved, airlines are ordering new planes, and overtime hours are at record highs.
Gold stocks, and to a large extent commodities stocks, in general, have been the worst losers for about seven years, save for the 2016 rally. Now, with economic boom times upon us, coin sales are down big – people have already forgotten about gold, it seems.
In a survey I conducted last month by calling seven dealers, they told me that people are complaining about having to pay a 1% annual storage fee for the first time since 2007.
The air has left the gold balloon, and it looks to be left for dead.
Three things can happen from here:
Many people confused the 2nd for the 3rd and piled into gold at disproportionate amounts and feel they have been “burned.”
Owning physical gold and silver is never a mistake, and I have never sold an ounce and never will. If for some reason, I have a bigger than normal position, I simply don’t add any more to it, focus on other asset classes, and grow my net worth, thus shrinking the precious metals percentage of my portfolio, indirectly.
With regards to the mining shares, it’s a different story, altogether.
These have been left to rot, especially the micro-cap ones, which certainly makes some of them cheap, but that doesn’t guarantee that they will immediately get revalued.
In that sense, you should come to terms with the fact that when you own shares of a company with the intent of selling it at a later date for much higher prices, there must be more buyers than sellers, and that’s certainly not the case right now.
The strategy, then, is to hold only the highest quality, most undervalued ones, that will be ready when the turnaround in sentiment finally occurs.
This means, by definition, that there are other markets, where there are more buyers than sellers – I focus on those, which have just recently experienced this change.
It doesn’t get any better than the set up with Artificial Intelligence in the field of machine learning. The key is to quickly consolidate the small operators, fund them, and help them reach profitability, by implementing Joint Ventures.
That’s how the early, big winners in the 1990s did it, and I’m onto the company, which aims to do it for Artificial Intelligence.
Diversification is paramount.
Don’t ever forget about gold, but make sure you also open your eyes to the most important new industry of our times, Artificial Intelligence, utilizing blockchain decentralized software.
Portfolio Wealth Global is going to be making a game-changing announcement in less than two weeks.
