“The magical metal is no match for the American mettle.” — Warren Buffett (2019)
Like many of you, I am a big fan of Warren Buffett’s investment prowess (but not his views on taxes and government policy).
In Warren Buffett’s just-released annual report, he rejects the notion of market timing. He confesses, “I have no idea as to how stocks will behave next week or next year. Predictions of that sort have never been a part of our activities.”
He added, “Markets can be extremely capricious… but over time provides the best measure of business performance.”
Regarding gold, Buffett said, “The magical metal is no match for the American mettle” of investing in businesses.
He notes that in the past 77 years, gold rose about 37 times its value. Not bad. But if you had invested in the U.S. stock market over the same period of time, your investment would have grown 5,288 times!
The Day I Met Warren Buffett
I’m not surprised by Warren Buffett’s negative comments on gold. When I met Buffett in New York in 2010, I showed him my Mexico $50 gold coin, and he said that his father, Congressman Howard Buffett, a conservative Republican, was fond of collecting gold and silver coins. “Me? I collect businesses and friends!”
Warren Buffett, my wife and I share a lighter moment in New York.
As far as investing is concerned, I have to agree with Buffett regarding the choice between investing in gold and investing in the stock market. Successful businesses have a much better chance of making big money than sterile gold, or even gold stocks, which are usually over-leveraged in debt and have little or no profit margins.
I did a study of gold stocks since 2000 and I was astonished to find that almost all of them vastly under-performed the S&P 500 Index. Many of them, in fact, lost money. While gold itself did better, the penny mining stocks were a disaster.
You can see the charts and the story I wrote up in this Investment U. column, “How to Lose Money — Investing in Gold Stocks,” right here.
While I do think that gold stocks can be a short-term money maker, they are for speculators only. They are not wise for long-term investors.
Beware of Doomsayer Gold Bugs
The problem is that I’ve met many investors who buy into the doom-and-gloom crowd and put way too much money into gold and gold stocks, far beyond the 10% I recommend.
A few years ago, I gave a talk at the New Orleans conference, a hotbed of gold bugs, when I was approached by several professionals (doctors, lawyers, etc.) who confessed that they had lost 70% of their portfolio.
I asked, “How is this possible, given that the stock market is at an all-time high?”
They said, “We bought into the doom-and-gloom scenario, sold our stocks and bonds, and bought the penny mining shares exhibiting at the conference. We’re down 70%.”
Then I asked, “Well, why are you here now?”
I was floored by their answer, “We’ve doubled down on our mining stocks.”
Ways to Use Your Gold and Silver
I do believe in collecting gold coins and silver dollars — a hobby of mine. The American eagle silver dollar is the symbol of www.freedomfest.com, as it represents liberty and sound money. I encourage everyone there to buy a silver dollar, have their picture taken with Steve Forbes after our closing panel and keep the coins on their person as a good luck piece.
I also give out an American eagle silver dollar to each student who takes my class at Chapman University. I wish these silver dollars would continue to circulate as money, as they had done before 1964. Sadly, they are squirreled away in safe deposit boxes today, never to see the light of day.
In sum, I don’t hide my silver dollars in a safe deposit box, I hand them out to students and family members. I also tell FreedomFest attendees to carry them and pass them along…encourage subscribers to use them as bonuses for employees, tips for cab drivers and shoeshine boys…use them to exchange goods and services…and give them out as gifts upon graduation, birthdays, etc.
Yours for sound money, AEIOU.
Get a Copy of Warren Buffett’s Favorite Quote Book!
“The Maxims of Wall Street” was the #1 seller at the Orlando MoneyShow. I sold four boxes (over 120 copies). Warren Buffett says, “Love your book. I plan to steal some of the lines.”
He’s quoted 34 times! It’s also a favorite of commodity guru Dennis Gartman, who said, “It’s amazing the depth of wisdom one can find in just one or two lines from your book. I love it!” The book also has been endorsed by Jack Bogle, Bert Dohmen, Richard Band and Alex Green.
Hundreds of valuable Wall Street sayings are found in the one-and-only collection, and they will bring back memories. The book is divided into categories, such as “bulls and bears,” “contrary investing” and “market timing,” with more than 800 quotes, proverbs, poems and short stories that offer a wealth of insights about investing.
The 5th edition is almost sold out! If you want the book, the charge is only $20 for the first copy and $10 for all additional copies. I autograph each copy and mail them for free inside the United States. They make a great gift to clients and friends. Order a box of 32 books for only $300. To order, go to www.skousenbooks.com or call Harold at Ensign Publishing, 1-866-254-2057.
CFA Society Book Club, Thursday, Feb. 28, Biltmore Court, Los Angeles: I’ll speak about my book, “The Making of Modern Economics: The Lives and Ideas of the Great Economic Thinkers” (Routledge, 3rd ed.) Find out why John Mackey (CEO, Whole Foods Market) has read it three times! The title of my talk is: “Who’s Winning the Battle of Ideas: Keynes, Marx or Adam Smith?” The event includes dinner, 5:30-7:30 p.m. The price is only $15 for my subscribers to attend. To reserve a spot, email email@example.com. You also can register at https://www.cfala.org.
Guess Who’s Coming to FreedomFest?
It look me eight years to get him, and now he’s coming!
Your editor poses with Penn & Teller after their Vegas show in the “Red Monkey Room.”
Penn Jillette of “Penn & Teller” fame (the longest-running headliner show in Las Vegas), Emmy-award winner and cultural phenomenon! Penn Jillette & Raymond Teller are famous for revealing many of the secrets of magic, a “no no” among magicians. In his special FreedomFest talk, he will reveal the “sleight of hand” behind the dangerous new “socialist” agenda in America. His presentation is not to be missed!
He will speak on Friday evening, July 19, 2019, on “The Magic of Liberty.” After his talk, I’ll be interviewing him about his incredible career, followed by Q&A from the audience, and a private reception (with photo and autograph opportunities) with attendees and speakers (limited to 100 attendees).
I’m excited. I’ve seen “Penn and Teller” a half dozen times in Vegas and “Fooled Us!” on cable TV. Penn Jillette probably is the most famous Libertarian today.
Between Penn Jillette and Kevin O’Leary of “Shark Tank” fame, I think we have the makings of a record crowd. Watch our three- minute video about this year’s big show: https://vimeo.com/311525927. Password: eastwood. Sign up today and take advantage of the “early bird” discount, which ends March 29, by going here and using the code EAGLE. You can also call 1-855-850-3733, ext. 202. Save $200 off the retail price. You pay only $495 per person/$795 per couple. Be a part of “the greatest Libertarian show on earth,” including our three-day financial seminar sponsored again this year by Eagle Publishing and Investor Cafe.
You Nailed It!
Sen. Dianne Feinstein Rebukes a Group of Brainwashed Children on Global Warming
By Mark Skousen
Editor, Forecasts & Strategies
A group of teenagers and children came to Washington last week to confront Senator Dianne Feinstein, of California.
The children had been indoctrinated by environmental radicals to support the extremist Green New Deal which predicts the utter destruction of the planet within 12 years if carbon emissions aren’t eliminated. However, as there is no need for hysteria and radical environmentalism, Sen. Feinstein, who has seven grandchildren, instead gave the students and their chaperones a lesson in civics.
Watch the two-minute Capitol Hill confrontation by clicking here. With students and their chaperones insisting that she sign the Green New Deal, as if it would be a magic solution to the environmental concerns that are shared by her visitors, Sen. Feinstein rebutted their alarmist approach.
Sen. Feinstein, who has served in the Senate since November 1992, after leading San Francisco as its mayor from 1978-88, said she had her own Green New Deal legislation to champion.
“I’ve been doing this 30 years,” Sen. Feinstein told her visitors who primarily consisted of a group of children with the Sunrise Movement, a climate advocacy group. “I know what I’m doing. You come in here and say, ‘it has to be my way or the highway.’ I don’t respond to that. I’ve gotten elected. I just ran. I was elected with more than a million-vote plurality.”
As her visitors pleaded with her to vote the way they wanted almost non-stop, Sen. Feinstein replied, “Maybe people should listen a little bit.”
Sen. Feinstein’s response to the drastic environmental fears provided a welcome breath of fresh air!