Should I buy GOLD or a Gold mining stock
When it comes to securing your financial future no one has more responsibility over the outcome than you, so today, I want to share a couple ideas to empower you with your wealth growing ventures.
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I’d like to thank the sponsor of this video Blue Lagoon Resources. They are a great company and I’ll tell you more about them later in the video.
Ok now, For many months now I’ve been letting my community know about stimulus checks and also stimulus packages. Because of congresses inability to come together on a package that stimulates the economy and gets it back on track, over 15 million people still find themselves out of work.
We are at a cross road as americans. If the US doesn’t do enough stimulus we could see the country and economy slip into a recession or worse a second great recession. If they do too much, we could see the value of a dollar drop while inflation raises the prices of food and other items we buy each day.
2021 is going to be a different year, when it comes to investing and thinking about your money.
The US economy is still in desperate need of stimulus. Headlines in the media say things like 2021 could be a rough year for the US. Joe Biden has said it will be a dark winter and a difficult year.
The trump administration has seen a V shaped recovery but mostly in the companies that can survive lock down; this has created a K-shaped recovery, where the few thrive and the majority is victimized by restrictions and layoffs. Meanwhile to survive closing down and shutting big parts of the economy, the US government has added nearly $5 trillion to the national debt in less than 1 year with the potential for even more spending to keep us from falling into another Great depression.
In today’s video I want to share what could be the best way to beat inflation, protect your money and keep it growing.
What if I told you two of the biggest names in investing are now jumping into precious metals as a way of growing their companies portfolio in what could be a weird 2021 economic rebound?
For example, big hedge fund manager Ray Dalio, who is worth $17 billion, has been pre-occupied with worry about inflation as the federal government and the Federal Reserve Bank take on massive amounts of debt with no real plan to pay down the debt. In his book, he lays out a solid investing future and I was shocked to see how much he believes in owning gold and silver and other precious metals. Paul Singer, another hedge fund titan, has called gold the last undervalued asset class in the world. Both Goldman Sachs and Wells Fargo analysts forecast gold hitting $2,300 in 2021.
In the spring of 2020, the stock market dropped by double digit numbers. Some areas of the economy have rebounded nicely, while others are still trying to find a new normal. Around this time, world Famous investor Warren Buffet who is worth $87 billion sold off his entire portfolio of Delta stock.
Now Buffett has been a huge fan of commodity stocks and not a fan of Gold. However earlier this year Warren Buffett converted to gold and started investing in gold mining companies.
So why did Warren Buffett suddenly drop most of this airline stocks and divest himself of large amounts of bank stock?
What is he seeing in the future that we aren’t seeing ourselves?
Why would Warren Buffett buy gold mining stocks?
Why would Ray Dalio buy gold and other precious metals?
Why is Ray Dalio’s biggest fear inflation and the shrinking value of the dollar?
Again, What are they seeing that you and I are not seeing?
You don’t become a billionaire or world famous investor like these two, without astute insight and profound knowledge of inflation and monetary policy.
While the stimulus the government has been willing to pass has been helpful to millions of people, it has weakened the dollar, which is trading at 5-yr lows, and it has given serious rise to worries about inflation. Essentially, as the government prints more money, money has less value and buying power.
What I think Warren Buffett's Berkshire Hathaway has figured out is not to own the gold but to own the mines that develop gold projects for the years ahead. I think Warren Buffett wants to invest in the gold producers and not the gold directly. Think of it like a goose that can keep laying golden eggs. The median cost of mining gold is $975/ounce, while the open market price is nearly double that, so the industry is enjoying healthy margins right now!
So how do you protect your money against losing buying power and value over time? This is where having Gold or Silver in your portfolio might make a lot of sense.
For example, let’s say 100 years ago someone buried $20 of gold and their neighbor buried $20 of paper money. That gold would be worth $1840 today while the paper money would be worth $20.
I share this so you can see that the gold coin didn’t change but its value changed drastically over time in a positive direction. While the paper money kept the same value but actually had less buying power.
Did you know in 2008 during the great recession the price of gold was $972 an ounce?
Today that same gold is valued at $1840 an ounce. Yes the price of gold goes up and down but it always trends in a positive direction over time.
In fact, Goldman Sachs and Wells Fargo reported that the price of gold could be around $2,300 an ounce by the end of 2021 and Bank of America recently revised their target to $2,063.
Overall, many wealthy people either own gold or silver as some percentage of their overall portfolio, since it provides a hedge to currency devaluation; in the past 20 years, gold has been a top-performing asset, rising by 700% since the year 2000 (more than the S&P 500 or the NASDAQ 100 have!).
So how do you take advantage of gold and grow your money without having to hold rooms full of gold at your house?
Allocated vault storage, where a company warehouses and protects the gold for you has become more popular in the last 10 years.
You can also look into a gold or silver IRA if you own a self-directed IRA program
Another popular route you could take is the route Warren Buffett has been going is looking into gold and silver mining companies. That way you are earning based on the company pulling gold and silver and platinum out of the earth.
The largest gold miner in the world, for instance, is Newmont corporation, which trades on the New York Stock Exchange. One of the advantages of Newmont is their track record and dividend policy, as well as being a dominator. However, one downside is they been around for a while, which means that their stock might have already appreciated, so it might make sense to look into a mining stock that still has a lot of upside potential.
One group that I’ve owned in the past is Hecla mining in Idaho. They mostly conduct silver mining. Silver can also be a great way to hedge against inflation and secure gains over time.
But sticking with gold mining companies, there is one that I want to focus on and it is based in Canada and trades both on the Canadian stock exchange, under the ticker BLLG and also available for U.S.-based investors through the symbol (BLAGF). The name of this particular company is Blue Lagoon Resources.
Now to get a mining operation up and fully permitted takes many, many years and millions of dollars. Blue Lagoon has gone through this process and with its flagship project, it only has to complete a number of last items and amendments, before it can make a mining decision by the summer of 2021, which is exciting.
They will begin their biggest-ever drilling program in January of 2021, which means that the potential for significant news is right ahead. Now these guys are in a unique position because they have $6 million in the bank and only $200,000 of company debt, so they're funded for this activity. Recently their lead geologists used CAD technology along with sampling to conduct exploration efforts on their project.
According to company filings, Dome Mountain project has 15 high-grade veins of gold. In fact, in an interview their CEO Rana Vig did, he explained how he purchased Dome Mountain for CAD$27M, even though the two previous owners spent a combined $68M on it to get it to its present stage, which is a sign of astute negotiating. The market cap of the company is actually still below that $68M figure to this day!
This same CEO took two companies from start up to market with significant success. He’s now jumped into the gold mining space because he sees it as an incredible opportunity as the world seems to be looking for security and physical value backing money vs fiat currency and issuing endless amounts of debt.
You can check them out on U.S. exchanges by searching the ticker symbol (BLAGF)
They could be a great opportunity based on what I have read and still having lots of upside potential, in our view. I think the biggest advantage is the stock price is more approachable than the price of one gold coin. So the barrier to entry is obtainable to investors at all starting points.
Ok so another area you might want to look if you aren’t able to buy gold at $1840 an ounce would be silver dollars which as of this video are around $24 an ounce plus around a $3.50 spot price or $27.50 a coin.
You’ll want to work with a reputable company online or in your local area. For beginners I would suggest looking into silver rounds. Now you will be shown something called Morgan Silver dollars. These are high quality silver but they aren’t in production anymore so they are more like a collectors item that happens to be minted from silver.
They are cool looking but don’t get roped into paying more for a collector coin when what you are really after is silver as a way of protecting the value of your money while hedging against inflation.
So 2021 could be a really hard year with lots of ups and downs or it could be a great recovery year. Much of the success of the economy is really out of our hands.
However, controlling your own economy is so much easier as you educate yourself on new opportunities and also proven and tested ways for growing your wealth.
They say success leaves clues and the track record of owning precious metals shows that over time Gold and Silver have been a great way of protecting and growing money.
However, as Warren Buffett is showing, owning gold mining stocks that have potentially bigger upside and a lower barrier to entry could be the next hot thing for 2021.
Thanks for joining me today.
I wish to remind you that you are amazing
I appreciate you being in my community and I’ll see you on the next video.