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EB Tucker - Gold Equities and Gold ETFs are dead!

June 18 2020, 19:22 GMT+01:00
Interview with market commentator and gold expert, EB Tucker. Also Non-Exec at Metalla Royalty (MTA).

"Gold is a unique asset right now because it does absolutely nothing."

'There’s a reason why the world’s elite count gold as a core asset. During periods of financial turmoil, it’s invaluable. Gold is the only asset that's not someone else's liability. Apartments rely on paying tenants, stocks rely on company profits, bonds rely on stable interest payments. Gold doesn't rely on anyone or anything for its value.'

Matthew Gordon talks to EB Tucker, 16th June 2020

EB Tucker has been a renowned gold commentator for many years now. He's a regular and go-to for gold interviews. For five years, he wrote the newsletter for the Casey Research team, which is led by a legendary speculator and bestselling author, Doug Casey. He's been actively involved in writing about gold for years. Gold is hot right now; everyone knows it. Sitting pretty at c. US$1,700/oz today, investors need to know everything they can about the most alluring commodity of the last 3,000 years. It's been a long journey in this gold cycle that stretches back to 2008.

Tucker recently released a book, 'Why Gold? Why Now?: The War Against Your Wealth and How to Win It,' which deconstructs and simplifies the gold investment space.

Part 1 cover covers 'Why Gold?' The book claims that history has shown an 'ugly pattern' of careless governments spending ineptly and in excess, leaving ignorant Joe Shmoe savers footing the bill.

Part 2 gets into 'Why Now?' It explores recent developments that forebode a 'dangerous future' for money, cementing gold's status as a safe-haven investment.

Lastly, part 3 lays out some of the options available to gold investors. A 'How To' manual for investing in gold, which covers everything from gold bars to gold coins.

Let's expand on these topics. Why gold? Tucker claims that negative interest rates will soon become a reality. This means that average savers will be paying banks for the convenience of having their money. When this reality hits, most savers will withdraw the money from their bank accounts and invest it into the market in some form, flooding the market with new capital.

The key thing that gold can provide to investors is financial freedom. Other investments are reliant on other volatile economic conditions to create value. Gold is stationary, solid and safe. Investors can buy gold, hold it for as long as they desire, then sell it instantaneously for any currency in the world. No liability = a safe bet for investors. However, if negative interest rates remain small, would individuals who lack sufficient knowledge of the gold space decide to take the risk and invest their money in gold? I'm not so sure. However, Tucker was keen to point out the frantic nature of the world we live in today. Be it COVID-19, the U.S. elections, or civil unrest, global economies are currently extremely volatile, so these small negative interest rates could potentially grow.

We are entering a new era; an era in which even kids in their 20s are going to need to figure out how to be some kind of macroeconomist. The price of goods is going up, while the value of owned goods is depreciating. Deflation is the order of the day, and the economic consequences will be vast and sweeping. "Never in history" have these types of conditions occurred, and they will continue to occur until the world decides to hit the reset button. If you believe that global governments have a terrible history of being stewards of their currencies, this could certainly be an investment methodology to consider in more depth.

The real question is: why buy gold now? It's over US$1,700/oz! While buying at US$1,250 would have been more favourable, interestingly, Tucker says the gold price is going to go even higher. The total value of gold on the planet right now is US$10T. Debt is closing in on US$300T, and this is climbing extremely quickly. He is adamant that this system is going to get bigger and bigger until it is reset and revalued. As a consequence, if individuals don't hold anything that isn't subject to the revaluation, they are simply converted into the new system.

I buy some of what Tucker says, but I'm not sure if the vast majority of individuals will care. Most people simply want to work their 9-5, pay their bills and put food on the table. He foresees a behavioural revolution whereby individuals are forced to rethink their fiscal strategies. In previous generations, if our ancestors had saved US$1,000 in cash, US$1,000 in gold, the cash would retain very little value, whereas the gold would be worth around US$80,000. There is clearly an opportunity here for people who know what they are doing. Tucker himself is also a massive fan of royalty companies... being an NED of Metalla Royalty.

While Tucker is optimistic about the price of gold, but he thinks it is "sorcery" to try to predict the gold price beyond the end of this year. I agree. If you see headlines of someone is telling you they can predict the future, whilst attractive, especially in times this volatile, investors might want to err on the side of caution as this tends to be purely promotional and attention seeking rather than solid advice.

However, if you're fully on-board with the gold macro thesis, and you buy the story about a lack of liability, how should one invest in gold? Tucker is very much against ploughing more money into the stock market right now. He thinks the stock market is incredibly inflated and is in a bubble that's just waiting to burst. This has been caused by the lowest corporate tax rates in history and immense expenditure by companies buying back their own stocks. While stocks are unlikely to crash to zero, Tucker thinks it is simply a bad time to throw money into the stock market when it's already juiced up to the max. What do you think? Is now a good time to put money into stocks or ETFs?

Moving away from equities, Tucker isn't keen on newbie investors going out and buying bars of gold either. These come with big premiums. A good starting point could be South African Gold Krugerrand coins, Canadian Maple Leaf Coins, and US American Gold Eagles in 1oz denominations. This is a "really safe place to start." Investors will just have to store it somewhere nobody would think to look... this includes keeping it in multiple different places to mitigate risk, and using safety deposit boxes.

What did you make of EB Tucker? Do you buy this story? Will you be looking into physical gold? Comment below and we will respond.


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