It is interesting times indeed and increasingly feels like I’m living in a cartoon with all that is going on. Misinformation and competing motives make things opaque and hard to decipher. Where does one invest to protect capital and grow it? The backdrop I keep in mind when trying to understand things is that as a complex system gets larger, the risk in the system goes up on an exponential curve. What the shape of the power curve is its own rabbit hole, but size/complexity and risk certainly do not have a linear relationship. As third parties (government / big banks) make interventions in the economy and markets, they cause distortions within the ecosystem that can grow overtime and become harder to trace or model accurately. The good news is these distortions cause great opportunity for speculators who can buy the gap between aggregate perception and reality and be patient. As Isaac Newton said, and I’m paraphrasing, he made the most money in his life by doing nothing. What he meant by that was to bet right and sit tight (patience). The rest of it is just mathematics and analyzing historical cycles.
Gold and silver are the oldest form of money that are the safest rung on John Exter’s famous pyramid, which means it is the least risky and most scarce. Precious metals are time-tested, widely known and liquid, and are frequently used to restore confidence and order in newly-formed financial systems that are born post-crises. If one believes the current financial system/regime under which they are living has become wacky, unpredictable, and unworthy of confidence, precious metals are a way of removing oneself from the current system and entering whatever new system is formed with a portion of their capital should there be a severe enough crisis.
The banks have manipulated silver down for decades I think there is a lot of funny paper out there pretending to be legitimate metal and some millennial sleuths have both figured this out and were able to influence crowds of people to take positions en masse to disrupt the institutional speculative positions and profit, as seen recently in the massive short-squeeze on GameStock equity shares that were heavily shorted by multiple hedge funds. This resulted in these hedge funds losing billions of dollars in a matter of days and requiring large capital injections from their equity holders.
On another note, cryptographic currencies are also another avenue of speculation in that it is on the very frontier of technological development as we will see a new internet 3.0 born in which artificial intelligence, edge computing, blockchain, and the internet of things (many smart devices) mesh to drastically improve our standard of living and change how we interact with the world (think autonomous cars and augmented reality smart glasses). In an expanding market such as this, it can become a driver of substantial portfolio out-performance. Having a solid base of precious metals enables one to “barbell” these extremely low-risk assets with exposure to very speculative assets with the potential for very high returns. This method enables one to not have to worry about what they have for breakfast changing, regardless of outcome.
Sorry for rambling - I just wanted to express how I see life through my lenses.
Disclaimer: None of this is financial advice or advice of any kind. Do the opposite of what I say — keep your fiat in your bank accounts where it is safe. Treat every word above as if it is fake news conspiracy theory gibberish. RIP Harambe