About the gold price falling down 50% ?

That's awesome Pan man

 

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https://www.euronews.com/business/2...est-gold-discovery-in-more-than-seven-decades

 

I see that happening IF the chemists learn how to make gold from seawater elements (which they can) but so easily it's profitable. Never say never, but I wouldn't bet a penny on shorting gold or silver.

 

Gold and silver has been a solid form of exchange for as long as man learned fire could make food taste better. It went through a lull, but just a blip on the scale of relativity since recorded time. I don't see PMs going down that much unless the means of extracting make it irrelevant, sort of like lab grown diamonds have done to that market.

 

It's not out of reach for the average individual, if invested in gold funds, much like fractional shares of bitcoin..... I'm not aware if there are funds for that other than mining companies but I'm not in the loop for that so there may be. I own a several ounces of physical gold and I'm content with that.

 

Agreed...and folks have to remember, when you short, your gains are limited to the price you short at and your losses are theoretically unlimited.

Just talk to a GME short from 2000 !!

 

You just buy less.

At FUN 2020, gold was about $1,650 an ounce and I got 3 full-ounce coins.

I'll be lucky to just get 1 coin at FUN 2026.

Nothing you can do but adjust.

Working on some client estate issues the last year or so, I do think that when all these trillions of dollars is inherited by Baby Boombers and earlier generations, that you are going to have people with nice sums of $$$ that if they aren't blown on a brand-new Ferrari or Lamborghini or McLaren or Corvette....and aren't 100% rolled over into stocks and bonds.....might find some $$$ going to tangible assets like PMs, gold coins, etc.

I can see a person who bought fractional gold coins for years suddenly with a multi-six figure sum splurging and buying a few gold coins, even at $5,000 per coin.

In fact, I mentioned to a beneficiary I am advising that buying a gold coin for her grandchild's/great-grandchild's birth year makes for a unique memento and one that they will treasure and remember alot more than the equivalent sum given in cash or whatever. She agreed.

 

The answer is simple. Which Tier 1 asset would you currently choose in todays World?

• Cash
• Government securities (like U.S. Treasury bonds)
• Listed stocks and bonds
• Physical gold (as of July 1, 2025, under Basel III regulations)

• Cash/US Dollar is currently down close to 11% year to date. You have to make 11% interest on your money just to break even. Whats your bank paying you in interest?

•T Bills are currently paying 4%
No thanks with inflation and the dollar being down 11% on the year.

•Stock market
No thanks, not at the moment. Wait until after the correction.

There is only one choice left.

•I believe the current price of gold is an indicator of the current condition of the world and lack of faith/trust in the US Dollar. People are flocking to it, as they always have through out history, as a safe haven in times of distress.

As for dropping 50% in value, sure anything is possible, but so is the possibility of it being reevaluated and doubling in price

 

It's not as simple as you would like, Eric, though I see where you are coming from.

Unless we have hyperinflation or something like that, Americans do not worry about slow erosion of the dollar. After all, the dollar fell (inflation rose) at 3-4% for 20 years from 1980-2000....and gold didn't do a damn thing.

Our inflation rate could triple...and if Central Banks decide to DUMP gold, the price will go down !!

The DXY is down 8.5% YTD and about 7% the last 3 years. That is not anything like past runs on currencies.

Since Americans buy things in dollars and since even international goods are often/mostly quoted in dollars...you don't need 11% or even 8.5% to "break even." Unless you put your money under a mattress, so long as you earn SOMETHING, you're doing OK even in the inflationary 1970's.

Safe, investement-grade quality bond funds and ETFs are paying about 6.25% mananged by some of the best financial professionals around. Should be core holdings for any serious investor, especially those who don't look at this stuff every day (like I do) or lack the time or skills to do so.

People have been saying that for a while...even in 2022 when we HAD the correction !!

But gold didn't do much in 1987 after the Crash...in 2000 during Y2K or the bursting of the Internet Bubble....in 2008 during the GFC....or 2020 during Covid.

It's going up because more people can afford gold, even at higher prices today, than in 1950 or 1973 or 2000 or 2020.

Financial assets are you best insurance against any inflation and/or dollar decline. Gold MAY or MAY NOT do that. It's looking good performance-wise because of the quirks of the starting (low) and ending points (high) to the current time.

But over ROLLING TIME PERIODS, gold is a highly-volatile asset that can stay stagnant for DECADES and doesn't throw off dividends or income while you wait.

And I'm bullish on gold !!

 

I kinda like all the tier 1 assets… subject to change without notice.
Everything in moderation I’ve found is best. But as an old insurance guy, precious metals tend to insure against politicians over time.

 

Actually, the best insurance up to about the mid-1990's against inflation was small-cap stocks !!

 

Timing is everything in investing and times are changing. Trump needs a weaker dollar to bring back US manufacturing. This has been publicly stated many times and seems to be the way things are going.

A weaker dollar will make U.S. production more cost-effective and globally competitive, but it comes at the cost of reduced domestic purchasing power and potential inflationary pressures. So I'm thinking both inflation and a weaker dollar are gonna be around for quite a while, which will only benefit the price of gold.

•A weaker US dollar is generally bad for US Treasury bills (T-bills) because it makes them less attractive to foreign investors, potentially reducing demand and increasing yields.

• A weaker US dollar can have mixed effects on the stock market, potentially boosting US multinational and export companies while hurting those focused on domestic sales and potentially leading to an outflow of capital from US stocks towards international assets. A falling dollar makes US exports cheaper and increases the value of foreign profits for multinationals, but it can also increase inflation and reduce consumer purchasing power. Overall, the impact depends on the specific company's business model and global exposure. There is no doubt current economic uncertainty in both US markets and in the US Dollar. All are beneficial to the price of gold.

•Hyperinflation or currency debasement may be the only real way to pay off US debt.

But on a side note Berkshire Hathaway is currently holding more T Bills than the Federal Reserve. However, central banks globally now hold more gold than U.S. Treasuries, a historic shift that has occurred for the first time in three decades.

 

I know a drop in gold price (or any other precious metals) of up to 50%
can frazzle many people.

To alleviate you of your future concerns, your emotions and your despair, I will buy your AGEs etc for $2,000/oz NOW to get it out of your hands so you do not have to go through all the anxiety and life changing emotions.

I know, I know, how can I offer you $2k NOW to alleviate one from all these potential concerns. That's because I care So as long as Gold is near $4k I'll buy yours for $2k. It's hard for me to swallow the potential future loss, but I'll do it for all of you CT friends !!

 

It won't hurt, but it's not a magic elixer. Energy costs are much more important and we have a huge advantage there over all but the MidEast countries.

If you weaken the dollar...and CBs/SWFs dump Treasuries...then rates go higher....that offsets any manufacturing edge.

What worked in the 1970's won't work today. The UAW once had 850,000 members making cars...today they have 150,000.

Next time we are raising rates, the dollar shoots up.

Yup.

All of these variables can lead to a falling or rising other variable. You can't predict or tell -- you just have to let it play out. Folks much smarter than us spend BILLIONS to get this right and oftentimes they do not.

We can pay it off quite easily just by bending the entitlement and cost curves.

State and local debt is where the bubble is because of pensions and OPEBs.

I believe they had more in gold than Treasuries in the 1970's and early-1980's. But your point is noted.

 

I used to work in automotive in the mid 1990 through late 2008.
Back when there was a big shift to lower labor cost global areas.
We added a plant in manufacturing China and CAD design work in India.

If I recall my numbers, in general.
US labor + benefits was $29 / hour
Mexico labor + benefits was $19 / hour - the US & Mexico plants were within eyesight of each other.
And our China labor + benefits was $0.55 cents per hour.

Of course there is that time delay to get prototype items from China.
But 3D printing was just starting so I added a 3D printing to our design dept eliminating the high cost of making molds and overnight global shipping.

The US can bring back manufacturing. But I think the price won't be globally competitive for general items. There has been alot of shifting over the years in manufacturing segments .. to lower cost Mexico, then Japan, South Korea, China, Thailand, etc. The global companies are still keeping labor costs low for higher profits. Usually once envrionmental laws start growing manufacturing likes to move to lower cost, lower controlled areas.

With all else being equal, a product made in China will be cheaper (even with logistics) than the same product made in the US.
And we learned long ago about people and their buying habits. I recall the short "uproar" of when people learned that Walmart's "made in the US" stuff was made in China. But the prices were low. And people prefer low prices.

A weaker dollar will make our products cheaper overseas, but it may not be for long.

Gold and other precious metals lately, to me, have moved into the "crypto" mentality. but then foreign countries have been upping their own reserves being part of the equation to push $/ounce higher. I used to make market models on a variety of market segments in order to "time the market"
What i've learned, in retrospect, is that I'm always leaving out some input that normally is not important, until it is and becomes a primary cost driver.

I'm just glad that I built up my coin collection, which alot of it is in silver/gold before prices got too steep. Now i'm just trying to fill in the gaps but that gold price per ounce is a killer right now and I wouldn't mind a 50% drop.

 

It seems our careers mirror each other.

 

Chinese labor costs double every 8-10 years...or less.

As their labor force shrinks by 30% the next 30 years, Chinese wages will increase and they will not be competitive with the U.S. worker. Once up on a time, (West) Germany and Japan were low-cost wage countries. Most of us probably remember the fear that Japan was going to take over in the 1980's.

I still have my Fall 1980 Introductory Economics textbook which had a prediction/forecast that the Japanese economy might overtake ours by 1990. They had a great 1980's but the last 35 years they've been mediocre at best and bad for longer.

U.S. economy now over $30 trillion....Japan scratching to hit $5 trillion.

Don't believe the doomsayers and naysayers. Their track record sucks.

 

This depends on the time frame. Over time the stock market is the easy choice for me. We are in the 4th industrial revolution and investing in these companies is producing generational wealth.