by Jan Skoyles, Editor Mark O’Byrne
Tech is the umbrella word for all things fashionable to invest in right
now. Take the recent flotation of Snap Inc. (parent company of teen and
narcissists’ favourite app SnapChat), everyone wanted in on the $20 billion flotation.
Snap is likely a sign of a tech bubble that will cost a lot of savers and
investors huge amounts of money … again.
Before putting your savings into the likes of SnapInc we think there are
some major lessons wannabe investors need to learn. Lessons not just from
experienced tech investors but also from gold investment. Lessons which
should lead one to consider investing in physical, allocated, segregated
gold to secure your portfolio in a world of massive financial bubbles,
significant geopolitical uncertainty and huge investment hype.
Is this an investment in a product or an application?
In tech, there are two main things – the product and application.
For example, blockchain is the application, bitcoin is a product. Linux is
an application, a website built using Linux is the product. Both blockchain
and linux have shown they have endless use-cases and carry significant value
in their fields. But the products can vary.
In a similar vein there are many different gold products, whether ETFs, digital gold, gold futures however these all rest on the
application of physical gold. However there is much intermediation and they
are many tech and legal layers away from the real thing.
In a world of massive technological and systemic risk – as seen this week
– why not own the real thing?
Is there competition?
SnapChat, like any new company, faces a battle here as Facebook and
Instagram successfully copy the very things that drew first-movers to the
application.
When it comes to gold, there is competition between gold investment
products, but there is no competition to real, physical gold.
Physical gold cannot be mimicked by fiat money nor can gold products mimic
the qualities that direct ownership offers to investors looking to protect
their portfolios.
Is this something others are likely to buy?
New tech companies can rarely demonstrate a proof-of-concept. When it
comes to SnapChat the jury’s out. The company is built around a single
product and it’s losing users and money daily.
Gold is a different story, for thousands of years gold has been used in a
variety of ways but primarily as money and a store of value. Increasing
numbers of people around the world and especially in Asia want to own it. It
crosses many international borders – economic and even political.
Demand continues to increase and yet supply is anaemic at best – so much
that we are facing peak gold. Never can a tech company state that they are
at ‘peak share’ or ‘peak application.’
Conclusion
When over $20 billion is flowing into just one tech company that has no
profits, it is clearly not about real value but instead that there is an
abundance of credit in the system and rampant speculation.
Savers get nothing from depositing their hard earned cash in banks (maybe
less than nothing with near negative rates and increasing charges) and so
whilst they perhaps wouldn’t normally invest in companies like SnapInc they
are doing so, with risky consequences.
Gold investors can be assured that not only is it a form of insurance
against financial bubbles but that it has no competition, it has a variety of
use-cases, is hugely in demand and that it holds its value over time.
We’re pretty sure no tech stock can guarantee those things.
Now might be a good time for tech investors to reduce their allocations to
tech stocks and increase allocations and hedge their tech stocks with a
gold investment.
News and Commentary
“Political
mess in the U.S. is finally impacting U.S. and global markets” – GoldCore (MarketWatch.com)
Gold
holds gains as U.S. political worries hit dollar (Reuters.com)
Billion-Dollar
Gold Dream Lures Mining Maverick Out of Hiatus (Bloomberg.com)
Buyers
Flee VanEck Gold ETF as Barrick Slip Dims Mining View (Bloomberg.com)
Ex-FBI
chief Mueller named special prosecutor for Trump-Russia probe (Reuters.com)
Prudent
retirees are saving for a rainy day (Bloomberg.com)
The
Deep State Moves on Trump (DailyReckoning.com)
Financial
Bubbles To Burst as Washington Completely Dysfunction and Heading for Combat
(DailyReckoning.com)
What
the Heck’s Going on With Cryptocurrencies? (WolfStreet.com)
EU
grab on euro clearing would be “vastly damaging” for Europe and global
financial system (CityAM.com)
Gold Prices (LBMA AM)
18 May: USD 1,261.35, GBP 968.21 & EUR 1,133.95 per ounce
17 May: USD 1,244.60, GBP 961.70 & EUR 1,122.13 per ounce
16 May: USD 1,234.05, GBP 958.98 & EUR 1,117.93 per ounce
15 May: USD 1,231.50, GBP 952.32 & EUR 1,124.61 per ounce
12 May: USD 1,227.90, GBP 955.06 & EUR 1,129.55 per ounce
11 May: USD 1,221.00, GBP 945.66 & EUR 1,122.95 per ounce
10 May: USD 1,222.95, GBP 944.61 & EUR 1,124.99 per ounce
Silver Prices (LBMA)
18 May: USD 16.81, GBP 12.90 & EUR 15.10 per ounce
17 May: USD 16.90, GBP 13.03 & EUR 15.22 per ounce
16 May: USD 16.72, GBP 12.97 & EUR 15.13 per ounce
15 May: USD 16.59, GBP 12.83 & EUR 15.12 per ounce
12 May: USD 16.30, GBP 12.68 & EUR 14.99 per ounce
11 May: USD 16.37, GBP 12.70 & EUR 15.06 per ounce
10 May: USD 16.29, GBP 12.59 & EUR 14.99 per ounce
