Gold Price Analysis – Storing Value in the Digital-Crypto Age
I just wrote another thought piece putting the final nail in the gilded sarcophagus. Here’s how it opened…
In October of 2017, I wrote a Zacks Confidential (ZC) report titled “The Monetary Myth of Gold” where my goal was to reorient the thinking of investors away from ideas about the barbarous relic being a store of value and defeater of inflation.
I even explained why the writing was on the tomb walls for gold as Bitcoin and the distributed ledger technology of Blockchain were about to disrupt finance.
My alternative asset class was, of course, equities. And not just any old stocks, but the ones in the most innovative industries, like Technology, Software, and Biotech. My top 3 picks at that time were Alibaba, NVIDIA NVDA, and Edwards Lifesciences.
And I have persisted with that theme for the past 4 years in several subsequent ZC reports, and with documented trade alerts in both of my Zacks portfolios.
Here were some of my most important ZC pieces where I gave you great investment ideas like LRCX, AMAT, The Trade Desk TTD, CRSP, SQ, Editas Medicine EDIT, NVTA, Align Technology ALGN, MU, Baidu BIDU, MLNX, Exact Sciences EXAS, and Veeva Systems VEEV among many others…
The Technology Super Cycle (December 2017)
CRISPR Science and Investing (April 2018)
Artificial Intelligence: Investing in Life 3.0 (August 2018)
Big Data Gold Rush: Harness Chaos or Be Disrupted (June 2019)
Software Bubble Update (November 2019)
The AI Challenge: Get Smart or Get Disrupted (January 2020)
AI + 5G = Exponential Acceleration (June 2020)
The Virtual Economy: Digital, Remote, Intelligent (August 2020)
Demographics and Economics: A Strong Case for the Roaring 20’s Bull Market (October 2020)
Remember, all of these reports are still available to you in the archive as a Zacks Confidential member.
(end of excerpt from my March 22 Zacks Confidential report)
By the way, ZC is only $59 a year and it is by far the most ridiculous value in financial research at that price, since you get top research and top picks from 10 strategists every single Monday of the year!
When I write these longer research pieces, I really dive in to the longer-term trends and drivers of innovation that enable disruptive companies to grow revenues at 30-50% annually for several years. In late 2019, I couldn’t believe that TTD was still trading for $200 and Crowdstrike CRWD for $50.
Those turned out to be killer buy recos.
The Last Stand of the Barbarous Relic
Back to “gold vs. software” (or biotech, or crypto), in the video that accompanies this article I go over my final four nails in the gilded sarcophagus of the barbarous relic.
I do this because I see that many investors are still fighting the last war against inflation and throwing money away on gold and its miners while all around there are Software, Semiconductor, Bitcoin, and Biotech riches to be made.
To give you more incentive to watch, I’ll give you the #2 and #4 “nails”…
2) Gold bulls remember my CNBC interview in Nov 2009 where I called the rally to $2,000. But that rationale was over by 2013.
I had written an article about what central bank QE could do for gold and was invited on Maria Bartiromo’s Closing Bell when it spiked above $1,100 for the first time ever.
I had studied gold as a purely monetary phenomenon during the initial stages of QE dollar inflation and concluded that it could go to at least $2,000 on pure asset perception — if several central banks and large investment funds viewed the yellow metal as a convertible monetary asset.
My view was based on the unprecedented bond buying from the Fed and how that might affect other central banks who saw their dollar holdings at risk of depreciation. But this was before I understood how “software was eating the world” or knew anything of Bitcoin.
Over the next 18 months, gold did indeed work its way fairly quickly above $1,900. But then what happened?
What happened was that investors began finding that deflation — driven primarily by massive technology innovation — was here to stay. In fact, Fed QE of zero rates and bond buying might actually be pushing on a string to get inflation to return as it fostered even more innovative and deflationary growth.
Thus bonds and stocks became more valuable assets than gold. I told gold bulls in 2017 that QE would not inflate their precious (metal) very much — let alone save it — and this has proven to be true.
Maybe you saw this vlog from me recently when PayPal made a huge statement about Bitcoin and one Fed governor was already in agreement…
Digital Gold: PayPal, Square, and the Fed Send Bitcoin Soaring
Well as precious coincidence would have it, just this morning I heard that Fed Chair Jerome Powell called Bitcoin a “substitute for gold.”
It. Is. Almost. Over.
So now let’s look at the super-attractor luster of stocks making gold look pale by comparison…
(skipping “nail” #3 for a look at wild #4… Elon would be proud)
4) Gold is Eventually Doomed as an Asset Class
Strong words, I know. But hear me out.
You must have already imagined that the exponential power of Software and Biotech earnings power will always trounce the value of a heavy gold bar that you must pay to store and transport, and which offers zero organic growth.
Now, brace yourself. While #FinTech is a huge threat to gold as an asset class, consider the wild possibility that in the next ten years asteroid miners will find more gold than exists on the earth.
I considered that possibility here in this article and related podcasts from 2019…
Why Gold is Headed to Zero — And What You Should Buy Instead
That’s my take on gold and its diggers. Trade them if you can, but don’t bank on them for long-term ways to beat inflation. They never will.
If you need to check your biases and feelings here — as I always do with investing — check out the fantastic 2016 film Gold with Matthew McConaughey. There you’ll get a glimpse of the 1980s “yellow fever” that is no longer relevant in a digitally exponential world.
A Four-tress of Stocks to Beat Fort Knox
Given my arguments here today and elsewhere, can you see the absurdity of storing your wealth in a fancy rock when there are so many fantastic alternatives that are actually growing revenues and profits in world-changing, wealth-creating industries?
At the risk of repeating myself, great companies in disruptive spaces are how you clobber inflation.
Here are my current best ideas based on risk/reward upside over the next 6-12 months. I call them my Four-tress for beating the market and any possible inflation we might see over the next decade, or three…
(end of ZC excerpt)
The video attached here has the Four-tress stock picks. And yes, the market’s choppy waters right now still could see a test of NDX 12,000 and that’s where you have to be ready to load great growth stocks at 20-40% discounts.
Plus, I explain why I have become so interested in “synthetic biology” and how to find out about my 7 favorite stocks right now to take advantage of this new monster trend in Biotech.
Thanks for joining me in Cook’s Kitchen! Follow me on Twitter @KevinBCook to stay up to date on the latest innovations in Biotech.
Disclosure: I may have long or short-term positions in any of the stocks mentioned in this article and video.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
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Baidu, Inc. (BIDU) : Free Stock Analysis Report
Align Technology, Inc. (ALGN) : Free Stock Analysis Report
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Veeva Systems Inc. (VEEV) : Free Stock Analysis Report
Editas Medicine, Inc. (EDIT) : Free Stock Analysis Report
The Trade Desk Inc. (TTD) : Free Stock Analysis Report
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