Welcome to your weekly mailbag edition of The Daily Cut.
This is where you put your questions to our analysts at Legacy Research… Jeff Brown, Teeka Tiwari, Dave Forest, Nick Giambruno, Jason Bodner, Tom Dyson, Doug Casey, Dan Denning, and Bill Bonner. And we share their answers.
Before we dive in, if you have a question for Jeff, Teeka, or anyone else on the team, email us at feedback@legacyresearch.com.
Coming up… globetrotting gold investor Tom Dyson explores how to get ahead of currency depreciation…
And we hear from master trader Jeff Clark about his visit to the graves of fallen American soldiers in Normandy, France.
First, our tech expert, Jeff Brown, questions Elon Musk’s green credentials.
With Jeff’s help, your fellow readers have been profiting from the biggest technological advances of our lifetime…
For instance, readers of his large-cap tech investing advisory, The Near Future Report, have had the chance to make a gain of 267% on DocuSign (DOCU). It makes software that allows companies to sign contracts using e-signatures.
Jeff’s readers also had the chance to make a 386% gain on chipmaker NVIDIA (NVDA).
Jeff also has crypto asset Ethereum (ETH) in the model portfolio. It’s up 537% since Jeff recommended it in November 2017.
But one of the most explosive profit themes that Jeff’s been tracking is the rise of electric vehicles (EVs).
In particular, Jeff’s keeping a close eye on Tesla, and its eccentric CEO, Elon Musk.
Musk caused quite a stir in last week’s mailbag edition of the Cut.
Your fellow readers weighed in on whether Musk had manipulated bitcoin’s price by criticizing its environmental impact.
Below, Jeff takes a deep dive into Tesla’s green credentials…
Reader question: Hi, Jeff. First, I must say what a fabulous service you and your staff supply. At present, I only subscribe to The Near Future Report and Blank Check Speculator. And if this year will be even half as profitable as last year, I’II be very happy.
Like many other folks, I’ve seen bitcoin drop substantially since Elon Musk criticized it for using too much electricity to mine the coins. It seems rather hypocritical of him when Tesla produces EV cars and uses the same power source from fossil fuels to do so. I can’t help but wonder how big a carbon footprint his companies have.
– Andrew S.
Jeff’s response: Hi, Andrew. Thank you for your kind words and for being a subscriber. I’m sure we’ll be able to take some good profits again this year.
You’ve touched on an interesting topic.
Environmental, social, and governance (ESG) investing has become popular over the last couple of years. Companies are going to great lengths to at least appear to be providing some kind of social good… and to be seen as environmentally sensitive or working toward some kind of carbon neutrality.
To your point, carmakers have large factories that are largely powered by fossil fuels.
In addition to any carbon emissions produced during the manufacturing process, their carbon footprint also contains the emissions produced by those cars during their lifetimes. That’s why Toyota’s carbon footprint is even greater than that of the major oil company, BP.
You may think Tesla is in the clear on that front. It makes EVs that don’t emit carbon dioxide.
But we can’t forget that an EV’s batteries are powered by electricity. So the source of a country’s baseload power generation determines whether EVs are truly “clean.”
As you noted, if the energy powering an EV comes from burning fossil fuels, the EV is no cleaner than a vehicle powered by gasoline. The only thing that changes is where the fossil fuels are burned.
Instead of in the car, it happens at the power plant that produced the electricity. Worse, about 7% of all electricity is lost through transmission. One could make an argument that this kind of waste is worse than just driving a car with an internal combustion engine.
At an even higher level, a recent report identified that a consumer has to drive an EV for more than 50,000 miles just to break even on the fossil fuels needed to make the car and its batteries.
And this doesn’t account for whether the car is using clean electricity or electricity produced by fossil fuels.
Many folks who buy and drive an EV have a larger carbon footprint than those who drive an efficient internal combustion engine car. The exception is those who fuel their EVs with energy from solar panels – that is the ideal solution.
What’s Tesla’s carbon footprint?
It’s difficult to say. Tesla doesn’t disclose its emissions from on-site power consumption, purchased electricity, or the cars it sells.
That doesn’t mean Tesla isn’t working hard to reduce its carbon footprint. It’s adding solar panels to its Nevada Gigafactory to lessen its dependence on the gas-based power grid, for example.
And its solar-powered roofs are a great move to help Tesla owners ensure their cars really are clean.
Switching gears, a question on gold for Tom Dyson.
In 2018, Tom converted all his savings to gold. That’s because he sees a massive bull market ahead as fiat currencies implode.
And with this single move, Tom believes he will be able to set himself – and his family – up for life.
Gold is a classic hedge against inflation. As fiat currencies lose their buying power, gold comes into its own.
But one of Tom’s readers wonders if there’s a better way to take advantage of currency devaluation…
Reader question: When the global currency debasement occurs, all currencies lose value. Not against each other… but against goods and services (that includes labor).
The people hurting will be savers and those on fixed incomes (hardworking Americans and retirees). The people benefitting will be holders of hard assets (the rich) and debtors (the U.S. government and corporations).
Isn’t getting into debt almost better than gold? You get the money up front, which you pay back in devalued dollars.
And the return on investment is phenomenal if you use your borrowings to buy hard assets…
Tom’s response: It’s true. Currency depreciation benefits those who have borrowed in the currency, invested in hard assets, and then pay back their debt in watered-down currency.
I’ve been tempted to do this by borrowing dollars from my life insurance policies… buying gold or cheap tanker stocks… and then paying off the loans over the next 30 years in depreciated dollars.
Another way to make this trade would be to buy a property with a 30-year mortgage… and then watch the real value of those fixed mortgage repayments decrease to almost nothing over the next 30 years, as the property holds its value in real terms.
I’ll keep thinking about this idea. Gold trades at $1,892 an ounce at the time of writing. If gold should ever go below $1,500 an ounce again, for example, I’d be sorely tempted. Or if we found some other great asset at a fair price. But otherwise, the idea of being in debt stresses me out. I value my sleep too much.
Finally, in Monday’s dispatch, we brought you something different from our usual fare…
With markets closed for Memorial Day, we turned to friend of the Cut, master trader Jeff Clark.
He reflected on a visit to the American Cemetery in Normandy, France. It’s the resting place of thousands of young American soldiers who died storming Normandy’s beaches in World War II.
Jeff’s thoughts moved your fellow readers, and they’ve been sharing their reactions with us all week…
Thank you, Jeff Clark, for your heartfelt remembrance of your visit to Normandy. I hope to visit next year.
– Tom M., 82nd Airborne Division, 1967-1969
Wonderful piece on the Normandy invasion. So many of those soldiers were 18, 19, 20 years of age. I know your son will never forget what he saw that day.
– Alfred H.
Thank you for sharing your experience and thoughts. While there is intense focus on individualism, it’s refreshing to be reminded of what really matters. Thank God for those who lived and died, and those who do that today, for us.
– Eric H.
Very moving article. But somehow, you glossed over the tens of thousands of British, Canadian, Australian, New Zealand, Poles, Indians, etc. who had been dying since the start of the war in September 1939 – not December 1941, when America joined in.
A youngster reading your article would conclude that the only nation fighting the Germans was the U.S.
– Jeff T.
You expressed the sentiments of my heart so eloquently! There’s no place I would have rather been today than back at that memorial. It was moving beyond anything I had anticipated.
As part of Patton’s 3rd army, my father’s unit was originally scheduled to land there on D-Day, but on the trip across the Atlantic, they were re-attached to a different unit that went in 30 days later.
When they arrived, the front was in St. Lo, only 25 miles inland. Americans continued to spill blood to advance less than one mile per day. Had he landed on D-Day, I would probably not exist. Sobering thought. Thanks again, Jeff! You brought tears to my eyes.
I wish Republicans would re-examine world history before they destroy our democratic republic. I’ve never seen anything like the political malfeasance currently taking place with the Republican Party. Are we too stupid to preserve the idea that these brave men died for?
God help America! We’re in the ICU on life-support, and the outcome is looking grim.
– Sue Y.
Jeff’s article does a great job of reminding us of the sacrifices of our men and women on D-Day.
Let us never forget their sacrifice for their God, their country, and their fellow soldiers.
– James V.
My wife and I visited Omaha Beach and the American Cemetery a few years ago, and we were humbled by the beauty of the area and the tragedy of the graves. There was a special ceremony held that day to honor the 100-plus soldiers and family members present. It was a very simple but moving event, which we will always remember.
Memorial Day is only a small way to thank the many brave Americans who are not with us today as a result of their unselfish valour.
– Michael O.
That’s all for this week’s mailbag.
If you have a question for anyone on the Legacy team, be sure to send it to feedback@legacyresearch.com.
Have a great weekend.
Regards,
Chris Lowe
June 4, 2021
Bray, Ireland