Billionaire Investors Getting Vocal about Opportunities in Precious Metals
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Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.
Will this September be one to remember in the markets? It is often characterized by rising volatility heading into the fall. September also often ushers in a period of seasonal strength for precious metals markets.
U.S. stocks opened the month heading back up to record levels. Meanwhile, gold and silver traded with little fanfare. Prices bounced around quietly ahead of Friday’s big jobs report and are getting a boost here today now that the new jobs number disappointed and came in well short of what was predicted.
Gold prices currently come in at $1,833 an ounce, up 0.5% for the week. Thanks to the big up move today silver now shows a weekly gain of 2.7% to bring spot prices to $24.76 per ounce. Platinum is up 1.1% since last Friday’s close to trade at $1,033. And finally, palladium checks in at $2,453 an ounce after gaining 1.4% this week.
Despite lackluster performance in the precious metals sector of late, some other metals are taking off. Energy metals in particular are a hot commodity right now. Uranium – the fuel for nuclear reactors – has suddenly gained strength on supply concerns. And metals used in electric vehicles, including lithium and rare earth elements, are surging along with demand for electric vehicles.
Investors may be overlooking the fact that silver, platinum, and palladium are also energy metals. Silver is used in electronic connections, in batteries, and in electricity-generating solar panels. Platinum and palladium are used in catalytic converters and in hydrogen fuel cells.
Fuel cell technology may be in the very early stages of catching on as a clean and efficient way to power vehicles. Growth in this area will mean an increase in demand for platinum especially. It is currently the preferred metal for fuel cell catalysts.
Tesla CEO Elon Musk is well aware of the need to secure supplies of strategic metals for electric vehicle and battery production. Perhaps that is why he rarely talks about or tweets about metals. He would rather sidetrack the investing public into Dogecoin – which neither Tesla nor any manufacturing company needs in any quantity.
Yet other billionaires are getting more vocal about the investment opportunities in physical metals.
Hedge fund manager John Paulson told Bloomberg Wealth this week that he expects cryptocurrencies to crash and gold to surge as investors seek tangible protection from inflation.
Paulson rose to fame during the subprime mortgage crisis of 2007-2008 when his fund bet big against housing-related financial assets. He cashed in for himself and his investors to the tune of $20 billion.
Now he sees great opportunity in owning hard money.
Billionaire investor Jeffrey Gundlach is known in the financial media as the “Bond King.” But these days he’s not thrilled about owning dollar-denominated IOUs. In fact, he stated that his “number one conviction” is that the U.S. dollar is going to go down.
Gundlach sees the Federal Reserve Note’s decline leading to a big rally in gold once it breaks out of its recent trading range.
The smart money isn’t waiting for the public to pile into precious metals following a breakout. Large institutional investors are accumulating while prices are still low, and sentiment is downbeat.
Billionaires who see long-term value in hard money understand that in pursuing inflationary monetary policy, the Fed has gone down a road with no exits. The only possible destination is a dramatically devalued currency. The only question is how rapidly central bankers get us there.
Fed chairman Jerome Powell appears willing to facilitate as much spending and debt as the Biden administration wants to rack up. Although taper talk is in the air, there will be no tapering of the national debt. Therefore, there can be no tapering of the money supply. Under a debt-based monetary system, the supply of currency units has to keep growing in perpetuity in order to keep debtors afloat.
Powell is a functionary who knows what his role is – and that’s to enable politicians to spend at will and provide whatever backing the U.S. Treasury Department needs. Notwithstanding recent complaints about Chairman Powell not being socialist enough, Treasury Secretary Janet Yellen has recommended that President Joe Biden reappoint him to another term.
Powell is a Republican in name only who was originally appointed by President Donald Trump. The fact that Powell now enjoys support within the Biden administration proves once again that there is really only one school of thought operating in Washington when it comes to monetary policy. Everyone wants easy money because no one is willing to make the hard political choices.
That means savers, investors, and retirees have no choice but to get out of Federal Reserve Notes if they want to retain purchasing power. Fortunately, it’s easy to convert fiat currency into the hard money of gold and silver bullion.
Well, that will do it for this week. Be sure to check back next Friday for our next Weekly Market Wrap Podcast. Until then this has been Mike Gleason with Money Metals Exchange, thanks for listening and have a Labor Day weekend everybody.