The US government’s $135 trillion debt and $100 trillion off-balance-sheet liabilities are unsustainable and likely to be inflated away, potentially causing a substantial rise in the gold price.
In the past three years, gold’s move has been primarily due to foreign central banks buying gold, not retail investors, highlighting the importance of understanding market dynamics.
To build a gold portfolio, own physical gold for insurance, then create an investment portfolio based on beta (outperformance of gold shares relative to the broad market).
Successful investors focus on 10 stocks for 10 hours/month of study, analyzing annual reports, quarterly reports, analyst studies, and insider filing statements.
Tier one deposits with 10+ million ounces of recoverable reserves at current commodity prices are the most profitable, attracting major mining companies due to their bottom cost quartile worldwide and best quartile return on capital employed.
M&A deals add liquidity and hope to the sector, with multi-asset producers being less risky than single asset producers, as M&A lowers the cost of capital for capital-intensive businesses.
Contrarian investing is crucial, as markets work cyclically: the cure for high prices is high prices, and the cure for low prices is low prices.
Patience is key in investing, as investors often buy 5-year narratives with 3-month fuses, expecting quick returns on long-term investments.
Gold’s rise to new all-time highs despite treasury yield and dollar index fluctuations signals safe-haven investing, with fractional allocations from large capital pools significantly impacting returns.
Silver, as the “poor man’s gold,” is expected to outperform gold by 50-100% on a percentage basis, offering substantial leverage through silver stocks.
Newmont, despite guiding lower production and costs, remains undervalued with management focused on value creation, while Barrick faces challenges with declining production and inadequate reserve replacement.
Private precious metals companies with free cash flow and exploration stocks offer attractive opportunities for value unlocking and resource growth through a venture capital hybrid approach.
Mexico and Peru, the two largest silver producers, have seen production decline 30% from 2013 peak levels, with no major discoveries, making it challenging to match previous output.
Evaluating exploration plays involves understanding exploration history, valuation changes, capital structure, management track record, and potential for scalability and acquisition.
Oil prices are projected to reach $100 a barrel, with the gold-to-oil ratio at historic highs, indicating potential economic risks and higher energy costs.
Copper presents a compelling investment case driven by base demand and potential supply deficits, with electrification and grid rebuilding potentially creating a significant commodity story.
Trump’s tax reform proposal is revenue neutral, not actually reducing the tax burden on Americans or eliminating the IRS, despite common misconceptions.
The plan replaces income tax with import tax, likely resulting in higher taxes and increased cost of living for Americans.
The IRS will continue to monitor and enforce all income, as payroll taxes for Social Security and Medicare remain unchanged.
The federal government won’t experience drops in tax revenue, maintaining current levels of funding despite the proposed tax structure changes.
There’s a significant gap between public perception and the reality of the tax reform proposal, with many incorrectly believing it would lead to no income taxes or the abolition of the IRS.
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