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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Gold Investment & The Tech Stocks Bubble

Commodities / Gold and Silver 2017 May 18, 2017 - 02:32 PM GMT

By: GoldCore

Commodities

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.

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

Mark O'Byrne

Executive Director

This update can be found on the GoldCore blog here.

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Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: Past experience is not necessarily a guide to future performance. The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. GoldCore Limited, trading as GoldCore is a Multi-Agency Intermediary regulated by the Irish Financial Regulator.

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