Gold is always a popular topic in the Legacy Research mailbag. And with gold prices sinking to their lowest level of the year earlier this week, there’s even more attention on the yellow metal.
In today’s mailbag edition of The Daily Cut, we answer one concerned reader’s question about a “shocking” trend among gold miners.
Before we get to that, we’ve got an addendum to one of last week’s questions…
You may remember that one of your fellow readers wanted advice on how to play the continuing rally in bitcoin prices…
Reader question: I’m hearing a lot of advice to buy bitcoin. My question is… are you advising to buy bitcoin if we haven’t yet, or are you also talking to those of us who have already bought bitcoin that we should buy more? I’m a little confused.
– Sandra S. (Legacy Research member)
If you missed Teeka Tiwari’s (Palm Beach Letter, Palm Beach Confidential, Alpha Edge, and Crypto Income Quarterly) answer in last week’s edition, you can catch up here.
Today, Doug Casey’s hand-picked crypto expert, Marco Wutzer (Disruptive Profits), offers his take…
Marco’s answer: Whether you’re buying Bitcoin for the first time or already own some, now is a great time to buy. In fact, thanks to the Crypto Winter, it has already been time to get into Bitcoin and other cryptos for a few months.
If you already own cryptos and you bought in at higher prices, that means averaging down. After all, if you liked Bitcoin at $8,000 you should like it even more at the $4,000-$5,000 range. Here’s why…
As speculators we don’t try to time exact tops or bottoms. That’s a fool’s game. We are looking to participate in the big moves.
If you buy during bear markets when sentiment is very pessimistic and sell during the euphoria phase of a bull market, you can become incredibly wealthy.
If this is your first time buying a cryptocurrency I recommend the following:
Open an account with an exchange where you can trade your fiat currencies to crypto. (I recommend itBit or Bitstamp to my Disruptive Profits subscribers.)
Transfer the funds you’ve set aside for crypto to the exchange and buy Bitcoin.
Download and install a crypto wallet. Exodus is my personal favorite.
Make sure you back up your recovery phrase so you can restore your wallet if something goes wrong. (Think of the recovery phrase as your password.)
Transfer a small amount of Bitcoin – the equivalent of a few dollars – to your crypto wallet.
Once you’re familiar with the process and have made sure everything works the way it should, transfer the rest of your funds to your crypto wallet.
Congratulations! You are now part of the still small and exclusive club of crypto pioneers.
And now that you own Bitcoin, you can buy some of the most cutting-edge, up and coming, small-cap cryptos that can rise even more – the kind I recommend at my Disruptive Profits research service.
Now, that question about a “shocking” trend with gold miners.
And Legacy’s gold experts – E.B. Tucker (Strategic Investor and Strategic Trader) and Dave Forest (International Speculator) – are on the case…
Reader question: I am a long-term subscriber to the International Speculator, and I have a rather broad question for you which pertains to gold mining stocks in general.
If you take a look at the macrotrend, why have gold miners done so poorly relative to the gold price itself? It is somewhat shocking. Do you have some insight? Thank you in advance for your assistance.
– Rudyard E. (Legacy Research member)
E.B.’s answer: Mining firms are notoriously bad at investing. What this means is they have a bad track record of committing to big projects with even bigger price tags when gold is at a high.
In addition to avoiding innumerable headaches like socialist dictators, strikes, mudslides, earthquakes and the like, they also need the price of gold to go higher to make the project profitable. If gold moves in the other direction, the project can lose millions of dollars per day operating.
Worse yet, the debt used to put the project into production means monthly payments can’t stop or the lender takes the project over. Miners in this scenario have to operate at a loss, issuing stock on any perk up in price of life in order to survive.
As you can imagine, this is a terrible way to do business. Many mining firms, however, do just this. It’s why their stock prices continue to drag bottom, especially over the last few weeks.
There are several firms we follow in Strategic Investor that buck the trend. They have a track record of profitable operating even in the worst gold markets, like the one we’ve been mired in for the last six years.
But another way to avoid this altogether is by owning royalty companies. They have claim on a small percentage of gold mined, regardless of the cost to get it out of the ground.
Dave’s answer: Great question, and very interesting phenomenon. Back before the commodities bull market of 2003 to 2008, gold stocks used to trade at huge P/E multiples. Many gold producers were 40x, because gold bugs were expecting a big rally in the gold price… and pricing it into the stocks.
The gold price rally came and since then, expectations have deflated – so gold stocks no longer trade at huge, crazy multiples.
At the same time, the business performance of the gold majors has been abysmal. The root cause being there are really only a few good gold mines on Earth.
In my March issue of International Speculator, I discussed how almost all profits for majors Barrick and Newmont – the world’s No. 1 and No. 2 public gold miners – come from just one place on Earth.
Underperforming, the gold majors have been unable to increase their earnings – and so, at today’s more reasonable P/E valuations, their share prices have not risen. Meanwhile, gold prices have held up quite well amid the massive global monetary expansion of the last decade.
For our last Q&A of the week, let’s take on the controversial topic of artificial intelligence (AI).
And as we do for all technology questions, we turn to Silicon Valley insider – and registered deadly weapon – Jeff Brown (Exponential Tech Investor and The Near Future Report).
Reader question: I have a question that has to do with human interaction with self-driving cars. What will AI do with the people who lack common sense?
– Donald H.
Jeff’s answer: The answer is computer vision.
Computer vision is a form of artificial intelligence (AI) technology. We can think of it as the “eyes” of an AI. It allows an AI to “see” the real world.
Computer vision uses a form of AI called convolutional neural networks. This simply means that it can analyze images, videos, or a real-time view of its surroundings – just like what would come from a self-driving car’s exterior cameras.
This technology is being used in something called Driver Monitoring Systems (DMS). I suspect most investors haven’t heard of DMS technology before, so let me show you how it works.
You may have seen a little black camera in an Uber or taxicab, typically mounted near the rearview mirror.
These are for insurance purposes. They simply record video of the car’s interior in case there’s an accident or a problem with the passenger. That way, there’s video evidence of what really happened.
These kinds of cameras are just video cameras, however. They don’t use AI and computer vision technology.
But a DMS does. The image below shows how a DMS can identify how alert a driver is. It can determine if a driver’s eyes are open, how often they blink, where they’re looking, and even whether their pupils are dilated.
DMS can determine if a driver is sleeping, and then send a vibration through the steering wheel while emitting a sharp sound to wake them up. It can even determine if a driver is sad, angry, violent… basically any condition that might be dangerous for driving.
This might seem a bit futuristic, but I can assure you that the technology is real and working today. And widespread adoption is right around the corner.
That’s all for this week. But before we go, a quick announcement…
If you haven’t already heard, the date and location of our 2nd Annual Legacy Investment Summit are finally set…
It all happens this September 23-25 at the world-renowned Park Hyatt Aviara Resort Golf Club & Spa in beautiful Southern California.
Our Legacy Research experts and special guests will be presenting all new research and investment recommendations… along with our best wealth-building strategies for late 2019 and beyond.
So visit our brand-new Summit website – www.legacyinvestmentsummit.com – for all the details on…
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Discounted “Early Bird” tickets
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How to get $1,000 just for showing up
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Our growing speaker lineup
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Reduced room rates at the Five-Star/Five-Diamond Aviara Resort
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Travel to and from the event
And next week, as a special bonus, we’ll be temporarily unlocking Palm Beach Trader editor Jason Bodner’s presentation from last year’s Legacy Investment Summit.
In it, Jason revealed the names of five stocks that have shot up an average of 48.5% in the six months since the conference. So look out for that next week.
Have a nice weekend.
Regards,
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James Wells
Director
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