The markets $SPX500 open not making much movement today with conflicting news about China. As for our portfolio, we start December strongly with GameStop $GME up by 1.5%. $OIL prices are up by more than 2% today and our oil stocks $CXO and $PE are up by nearly 1% each. $SWKS also up by 1%. $AAPL and $JPM reaches ATH. The only stock doing poorly today is $DGE.L and $FIT down by 0.5% and 0.7% respectively.
GOLD will go to $5000 by 2030 🏆
In February, I made a video saying that gold was a bad investment but my mind changed as I bought the Gold $GOLD ETF $GLD , sold it and then invested in the gold miner Polymetal $POLY.L . What happened?
I still believe that gold is not an investment as it is not a value producing asset. The same thing can be said about Silver $SILVER , about the US Dollar or any other fiat currency, even Bitcoin $BTC and Ethereum. It is not like real where you invest and you receive rent as cash flow or invest in stocks, and the company is growing. Unlike other commodities, there is no big industrial use of gold. Silver is the best electrical conductor and oil $OIL is the most important commodity in the world. People buy gold only for jewelry and as a hedge. Gold is the best hedge against uncertainties.
I cannot predict gold prices but there is a high probability that gold prices can go to $5000 by 2030. From 2001 to 2011, gold prices moved from $260 to $1800. That's an increase of 6.7 times in 10 years. Stocks gained only 15% during this period. There was the dotcom bubble bursting, the war in Iraq and Afghanistan, the global financial crisis, the Eurozone crisis, the Arab Spring. All these uncertainties led to higher gold prices. From 1980 to 2001, gold prices fell from $664 to $260. During that period, there were no big political unrest that could move gold prices higher and there was a period of high interest rates which made bonds and cash more attractive than gold. Gold prices can go to $5000 or even $500 in the coming decade and we should not predict what will happen. We can only look at different scenarios and see what is more probable.
In his LinkedIn article, Paradigm Shifts, Ray Dalio says that the last 10 years has been the best for stocks in the last 40 years. Investors expect the same trend to continue but it will most probably not happen. The markets are being engineered in most big economies. The Bank of Japan is buying ETFs holding stocks, the European Central Bank is buying corporate bonds, interest rates are negative in many countries. Governments are printing a lot of money and they are making more and more promises. This is creating a wealth gap and a rise in populism. There will be a point when all these central banks and governments will lose control and there will be stagflation or hyperinflation. People will then buy gold. In the last decade, since 2011, gold prices have been falling and there is going to be a paradigm shift when gold prices rises in the next decade.
I prefer investing in a gold miner rather than gold itself because a company has an actual intrinsic value and you can use a margin of safety to make an investment. With gold, there is no intrinsic value and no margin of safety can be applied. I'm not investing thinking that gold will go to $2000 next year and $5000 in 2030. I'm investing for the long-term. That's why I chose Polymetal, they are investing in new mines which will bring future cash flows.
That doesn't mean that you should put all your money in gold or gold miners. I believe you can have 10-15% of your portfolio in gold. If gold prices go higher, you trim the positions and if gold prices go lower, you buy more.
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