Today one of the top money managers in the world said, yes, China will likely push the price of gold above $20,000, but this is what is really stunning.
October 4 (King World News) – Dr. Stephen Leeb: For obvious reasons, the next several months are likely to be very volatile, even more so than the first part of the year. So it’s worth realizing that something that was true during the first 20 years of this century is almost certainly a prelude to the next 20 years and beyond.
Which is to say: Jump on the likely short-term volatility to grab those investments that will resume their role as the leaders in coming decades…
Billionaire Eric Sprott Buying
To find out which company billionaire Eric Sprott just bought a 12% stake in click here.
So what are these assets? Here’s a quick quiz: Rank the following 6 assets/asset categories in order based on which gained most during the first 20 years of this century – 12/31/1999 to 12/31/2019. (Do it before looking at the correct answer below). In alphabetical order, they are:
- Bonds (as measured by an index of U.S. government bonds with expiration dates ranging from 5 to 30 years)
- Copper (measured by its price)
- Gold (as measured by its price)
- Iron ore (as measured by its price)
- Silver (as measured by its price)
- Stocks (as measured by the total return of the S&P 500, including reinvesting dividends)
What is the correct order based on performance? Here goes:
- 1. Gold – up 423%
- 2. Copper – up 246%
- 3. Iron ore – up 236%
- 4. Silver – up 230%
- 5. Stocks – up 224%
- 6. Bonds – up 165%.
It’s true. During this century’s first generation, while financial assets like stocks have gotten so much attention, commodities have done far better. And the biggest winner of all has been gold. I confess, while I knew that gold had beaten every other asset by a huge margin, I was surprised to find that copper and iron ore also outperformed stocks. This means – and I know this sounds crazy – that if at the beginning of the century you had purchased 100 pounds of copper and buried it in your backyard, its value today would be greater than if you had invested the same amount of money in an S&P Index fund. And the only reason to sell that copper would be to deploy those proceeds into gold.
China’s Push For $20,000+ Gold
These gains in gold and other commodities are just the start. As I have explained before in these interviews and elaborate on in my forthcoming book China’s Rise and the New Age of Gold, in coming years commodities will become even more important as the key asset class – as gold (which is both a commodity and a currency) in particular will be surging to levels that might sound fantastical, eventually likely reaching $20,000 an ounce or more.
The reason is a transformational shift occurring before our eyes – a shift in economic heft from the developed world, led by the U.S., to the developing world, led by China. The ranking of assets presented above is one manifestation of that shift, which is still in its early stages. After all, financial assets are the province of the developed world, while commodities are the critical drivers of growth in the developing world.
A critical point is that the developing world has a lot further to go before achieving anywhere near the level of the developed world. Per-capita GDP of high-income countries, as defined by the World Bank, is about nine times higher than that of developing countries. That daunting gap in income goes along with a massive differential in population. Only 17% of the world is in that high-income group. The 83% will be the growth drivers, ensuring that ever higher commodity prices will be the inescapable consequence.
A natural question is what happened in the 21st century that catalyzed the developing world. After all, a massive gap in incomes between the powerful countries and the less powerful had persisted for many centuries before it started to close in the past 20 years. The answer? It’s that the spectacular rise of China went hand in hand with an accelerating decline in the U.S. and other leading powers…
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The ranking of asset performance is actually about much more than how you could have made money in the past generation. It is also about why so many in this and other wealthy countries missed out on gold. Just consider how much better things would be today for Americans if gold represented a larger portion of household portfolios. If IRAs, for example, had allocated as much to gold as to stocks or bonds, the gains in gold not only would have been much larger but would have meant that the bottom 50% in this country would have been far better off.
But whenever gold was rising, the financial community insisted it was an anomaly. That industry, which is arguably the most important and richest in the U.S., has been largely oblivious to what really is going on. Only a miniscule percentage of financial players and advisors even know how to buy gold, I am talking about physical gold. A certified financial planner at any major financial institution is strongly discouraged if not forbidden to recommend gold or gold-related investments. The leading wealth managers are not only likely to underperform the S&P but will invest next to nothing in gold and other commodities for their clients.
That may be changing at least a little. Warren Buffett and his second-in-command Charlie Munger, who have been among the largest cheerleaders for financial assets, recently took a stake in one of the largest gold miners, Barrick.
The table of best-performing assets is notable for one that isn’t there. It’s oil. Why was oil such a laggard among commodities? Because the U.S. was desperate to become oil-independent. Fracking started to take off in 2011 and at its peak in mid-2020 had added 8 million barrels a day to the world’s oil supply. And yes, we were largely independent. But there were a couple of problems. Foremost fracking on a cash basis lost money every year. The cumulative loss was in the hundreds of billions of dollars. What a terrible lost opportunity: That is money that could have gone into infrastructure, money that could have gone into developing commodities such are rare earths and gallium that will be critical for technologies we will need in the world ahead of us. I put the blame squarely on the financial industry, which financed this historic debacle.
But you can bet that oil will have its day again. A major reason is that among the technologies we have lagged in developing are renewable energies. And to develop renewable energies on the necessary scale will take massive amounts of affordable oil. Also true is that oil is a critical feedstock for many chemicals and materials, demand for which will increase right along with growth in the developing world.
Other evidence of the rise of the new and fall of the old is that this is first time at least in my lifetime that the U.S. does not control one major supply chain. Whether you are talking about electric vehicles, or semiconductors, you have to look to China or other Asian countries such as Taiwan and South Korea.
Rise Of The Printing Machines
If I sound angry, I apologize, but in fact I am angry. Fifty years ago, the U.S. was the greatest country the world has ever seen. But as I have said before, when we went off the gold standard and adopted the petrodollar in order to maintain the dollar as the global reserve currency, we had it too easy – there were no monetary constraints. The jettisoning of the gold-dollar link allowed us to escape the kind of discipline that would have allowed us to remain great.
In a way we now will probably get another chance. As I have argued before, China’s goal is a reserve currency consisting of a basket of currencies backed by gold. This time it will not be a fixed price for gold but a more flexible and rising gold price – one set perhaps in the way central banks now set interest targets. Gold will rise with growth and commodity scarcities.
China’s digital currency is already in place and other countries are following. Digital currencies will be necessary for creating that basket – and that is another area where we need to get on our horse.
I know I may sound utopian when I envision that the U.S. could choose to function as an important part of a world that rises together, rather than trying to go it alone. But I do think it’s possible. We control our fate, and it will become clearer that our choice is to either cooperate with other countries, and in particular with a rising East, or get left out in the cold.
But whatever direction we pick, the best investment you can make is in gold and other commodities. It’s worth remembering some history, when the country’s richest individuals, the Rockefellers and Gettys, built their fortunes more on real assets than on P/E ratios. In tomorrow’s world, those assets will be based on gold and other commodities.
BONUS: Dr. Stephen Leeb’s latest book, China’s Rise and the New Age of Gold (available October 27, 2020), the “Oracle” of macroeconomic trends shows you how to profit from China’s rising place in the global economy. Leeb is the first to predict that by far the biggest opportunity will be in gold, as China’s rise precipitates an unprecedented bull market that will propel gold’s price to at least $5,000–and possibly over $20,000–an ounce.
Also of importance…
3 Shares For The Price Of 1
Eric King: “You have just completed your AGM with overwhelming approval to split your company into 3 new companies as well as acquire another high-grade gold company in that process. This latest acquisition is really a coup for you guys. Talk about how all of this will unleash a great deal of shareholder value.”
This Rarely Ever Happens For Investors
Ivan Bebek: “Eric, the opportunity is substantial for our shareholders. We are basically tripling an Auryn shareholder’s share position, which rarely happens for investors. With the opportunities that we see in our portfolio, we believe Auryn is trading at 1/3 of what it should be trading at today, which is a great reason to split and unlock more shareholder value. Value is being missed largely in part because we have multiple flagship assets in different commodities in one company. We are a very strategic group so we have planned this for nearly two years and, Eric, and it came out far better than expected in terms of assets, people we were able to add to our team, and, importantly, the point we’re at in the commodity bull market cycle.”
Eric King: “So if investors by a share of Auryn today they will receive 3 new shares, one in Fury Gold Mines, where you are building a Canadian gold mining company, one in Sombrero Resources, which you describe as having a ‘once in a lifetime opportunity’ relative to major copper discoveries, and one in Tier One Metals, a major silver discovery focused company.”
Agnico Eagle And Fury Gold Mines
Ivan Bebek: “For each share they buy or own, investors will receive .7 Fury Gold Mines shares – an incredible opportunity to become a part of building a major mining company. The vision for Fury is to acquire and develop a majors growth pipeline first – as this creates the most currency in every producer followed by an acquisition, or merge with a producing asset to become an operator once currency is achieved.
Our vision is aggressive in an environment where gold discoveries are harder to make and growth will be challenged. However, we have a great start to a portfolio that we strongly believe will deliver on that goal. Our CEO, Mike Timmins, comes from Agnico Eagle, and he is, in my opinion, an unrealized superstar in the mining business who has been through the enormous growth at Agnico Eagle, so he has the pedigree, discipline and experience, and he has already been part of making this type of model work.
Sombrero Resources came together with the ultimate outside the box thinking which led to the identification of the possible extension of a major copper belt in Southern Peru. We have yet to drill it ourselves, however the work to-date suggests an analogous opportunity to a Las Bambas caliber discovery of copper and gold – in just 10% of the 130,000 hectare land position. Las Bambas is the 10th largest copper producer globally, plus there are several other targets that we will be revealing on our way to the inaugural discovery drilling in the first quarter of next year.
Tier One Metals
Tier One Metals was intentionally named after the best performing commodities — silver and gold — in terms of market premium on discoveries. We have a major high-grade silver target on a world-class mining belt on the coast of Peru. This is a phenomenal target for a major silver discovery. However, in the past 6 months we have identified some additional world-class swings and we as shareholders want to dramatically increase the chance of a major discovery so you will see some key acquisitions added to our portfolio.”
Eric King: “When will spin co’s trade? What’s the last day to buy one share and get three new shares?”
Last Day To Buy Shares
Ivan Bebek: “The last day to buy shares will be confirmed by a TSX bulletin shortly, however as of now you can buy shares up until the close of business Thursday, October 8, to get all three shares.
Fury Gold Mines will take over Auryn’s symbol and trade immediately under the ticker FURY. Tier One Metals will follow with a February trading start date on both US and Canadian stock exchanges, and Sombrero is targeted to begin trading in March. We believe there is a considerable amount of value from ongoing work programs and acquisitions that will daylight into each for both Peruvian companies between now and then. Unlocking that value is what this is all about. Auryn Resources stock symbol is AUG in Canada and the US.
***To listen to the incredibly powerful audio interview with Nomi Prins discussing everything from gold and major markets to the similarities between what we are seeing today vs the 1970s and you can listen to it by clicking here or on the image below.
***To listen to this timely interview from the top trends forecaster in the world click here or on the image below.
Nomi Prins – Chaos Is Definitely The Order Of The World Right Now
***ALSO JUST RELEASED: Nomi Prins – Chaos Is Definitely The Order Of The World Right Now And This Permanent Distortion, This Is Now Our Reality CLICK HERE.
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