Gold as the Cornerstone

“We are living through the greatest improvement in human living standards in history” at The Spectator. Yet a speed bump is coming…

David Stockman walks us through the outrageous U.S. Federal finances.

“With most US portfolios heavily skewed towards paper assets (i.e. stocks and bonds) and nearly devoid of hard assets (i.e. energy producers/transporters, gold miners, copper producers, and agriculture nutrient companies) the stage is set for a significant paradigm shift over the next decade.” Gavekal.

“The highly probable and downright inevitable unwind of today’s trifecta of financial asset bubbles: stocks, corporate credit, and Treasury bonds may soon morph into a brutal bear market. The end game is unstoppable in our view and approaching fast. The Fed is between a rock and a hard place. It has been printing money like it’s the depth of the Global Financial Crisis while stocks and corporate credit are flying high reflecting a dangerous combination. The panic stimulus at this point in the business cycle is completely understandable, but it is only hastening the unwind of the imbalances the central bank has created and been impossibly trying to maintain.” Crescat Capital. Um, got gold?

“Over my 40 years I’ve done pretty well despite painfully sitting out the most recent decade-long equity ‘roid rage hunkered down with gold (about 25%), laddered 2-year treasuries, and a TIAA fixed-income account paying out guaranteed 3.6% per annum…For me, investing is all about valuations and process…Thousands saw the bubble and ensuing crisis in ‘08–’09, but nobody saw the interventions. The central banks clipped 5–10 years off a standard secular bear market and pulled markets off valuations that never dropped significantly below historical “fair value”. (Read that again: it is true.)…Last year I spilled my guts providing 20 metrics showing equities were >2x over historical fair value.2 It’s only gotten worse, so go read it ‘cause I am not gonna repeat it…How’d I do in 2019? My clinical paranoia has largely kept me very light on equities…My large gold and much smaller silver positions went up 19% and 16%, respectively. Gold equities don’t interest me as levered proxies for the price of gold. I remain unconvinced they know how to generate cash flow. Fixed income returns were nominally positive but surely did not beat the real (uncooked) inflation. I am well aware that bond traders might try to scalp a trade, but low-net-worth investors should buy investments whose stated return is acceptable rather than fixed-income timeshares. That, for example, excludes 10- and 30-year treasuries in my world.” David B Collum

Gold to house, stock and copper ratios by Lyn Alden.

The rare article on silver with meaningful numbers and facts for analysis from Mining.

10 Charts to Watch in 2019 from Callum Thomas as well as some of his best charts of 2019.

Gold will be the cornerstone of the Independent Stock Analysis portfolio at inception.