Take It With a Pinch of Salt

I can’t tell you how many messages I am getting from people about silver.

Have I seen this video, read this article, looked at this data, listened to this podcast. JP Morgan is about to go bust, the paper markets are overwhelmed, the price is manipulated, China is setting the real price, this is a reset. And so on.

The problem with speculative manias, especially when silver is involved, is that enormous amounts of misinformation get spread, much of it about things you and I, as ordinary investors, can do nothing about.

Take it all with a pinch of salt is my advice.

What I find interesting is that similar amounts of misinformation are being spread about bitcoin. The price is being manipulated on the futures markets, Strategy is about to go bust, Michael Saylor is this, that and the other, and so on. It’s game over.

The only real difference is that one is in a bull market, which may or may not be over, and the other is in a bear market, which may or may not be over. Sentiment for both is at extremes, albeit at different ends of the investment spectrum.

During every crypto winter I’ve known, people start to give up on it. The future is no longer what it once was. The tech is flawed. It’s going to zero. It’s not real. It’s a scam invented by the CIA, Jeffrey Epstein, Elon Musk, take your pick.

Again, take it all with a pinch of salt.

Remember, neither situation is permanent.

There is a case for owning both, and I do in my portfolio.

I’d rather bitcoin was $150,000 and more, of course I would. But I’ll take a sportsman’s bet that, from current levels over the next 12 months, bitcoin will outperform gold, and probably silver.

I know some readers prefer tangible precious metals. Others prefer bitcoin. Both points of view are fine. Each to their own. But I’m an own-both guy. Over the past six months the disappointment in bitcoin has been more than offset by the gains in precious metals. In previous years the reverse has been true, and the reverse will be true again.

With the extraordinary accumulation of gold by central banks, the rising price, Triffin’s Dilemma, and de-dollarisation, I do think it is possible some kind of reset is coming as far as gold is concerned. The price does need to go much higher for it to overtake the dollar as central banks’ primary reserve asset. It has already overtaken US Treasuries.

But that does not mean silver is going to be remonetised. Silver’s monetary role was always as a medium of exchange, and we now live in a world where exchange is almost entirely digital. Yes, I would prefer to be paid in physical silver. There is something quite spiritual about being paid for a job in physical silver. But so what. Convenience wins.

Silver’s role as a store of wealth was minimal. That is where gold still has use.

Yes, silver has umpteen industrial uses. It is a critical metal and in short supply. A rising gold price will carry silver higher too, just as it has platinum in recent months. But I don’t buy the monetary reset arguments as far as silver is concerned.

I do get them about gold though.

Anyway, good Sunday to you.

This week I appeared on Geoff Norcott’s podcast. If you fancy a watch or a listen, here are links to Spotify and Apple podcasts.

If you live in a third world country such as the UK, I urge you to own gold or silver. The pound will be further devalued, as will the euro and dollar. The bullion dealer I recommend, whereever you are int he world, is The Pure Gold Company. More here.

ICYMI here is this week’s commentary

This coming week I’ll be looking at the tax loss trades and I am aiming to have more on oil as well.

Until next time

Dominic

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