Y or Z you choose.17 Jul 2023 20:53
I know in my last investment a pure gold exploration stock investor hopes initially relied mostly on two things a) finding the stuff in viable quantities & b) the price itself.
Today the world's gold stock is around 180,000 metric tons (ex the stuff underground) and if it was all melded it would form a cube about 23 meters per side comfortably fitting into a football field. At the current Gold price of $1956 per ounce its value would be c.$10•8 trillion. Call this pile (Y).
Consider another investment of various easy to buy or sell stocks, bonds, farms etc.. costing a similar amount. Call this pile (Z). For that you could buy all the US farmland (c.850m acres) plus output of $165bn annually). Add about 18 Exxon Mobils earning c.$56bn annually and have c.$1tn walking around money. Given that choice which pile would you pick?
In the 50-100 years to come those 850m acres of farmland will produce staggering amounts of corn, wheat, cotton, timber, other commodities and cash. Exxon would have thrown off trillions of USD in dividends and hold assets worth many more trillions.
And remember we're talking 18 Exxons in this example, which would inc copper, silver and rare earth metals. The amounts would be incalculable probably a "google" (1x100 zeroes) over the next 50-100 years.
Meanwhile your 180,000 tons of gold have sat there perhaps adding 2500 more tons every year, yet incapable of producing anything. You may fondle and polish it but it won't respond it will remain lifeless for what motivates most gold buyers is fear of all other asset classes especially paper money and rightly so. Your only hope is in times of fear and economic collapse many will rush to buy gold so you can sell to the next man at a higher price than you paid.
Tulips would you believe became a firm favourite of investors in the 17th century. An early example of a
"Hot stock" was Tulips. Sir Isaac Newton invested in Tulips and became obsessed by the mrkt action and sensing prices were out of hand dumped his Tulip shares for a £7,000 profit. Months later swept up in the frenzy of Tulip mania jumped back in and lost £20,000 (£3,000,000 in today's money).
But I'd wager pile (Z) will compound at a far greater rate than pile (Y) over any extended period you care to name. Likely at "google" pace of returns as future populations move more goods, consume more food and require more living space to deliver goods and services to US citizens. Imo that's a racing certainty, rising populations will see to that as it surely will with 'Z' over 'Y'.
Evening all.
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