Gold as an inflation hedge vs gold as an investment… It’s an important distinction

September 13, 2021

John Rubino, Founder of the Dollar Collapse website joins us to share his reasoning why gold will rise in price. Since inflation is a key consideration this leads up into a conversation on why he is investing in gold. It’s a very important distinction to understand about your investment strategy and how much you put in the sector.

Click here to visit John’s site – Dollar Collapse

    Sep 13, 2021 13:33 AM

    1980 gold 800$ buying the top

    1980 DJIA 1000

    1987 DJIA 2700 buying the top

    DJIA everyone made a substantial amount of money buying the top

    GOLD everyone made very little in a 40-year time frame buying the top.
    When you factor in all the spreads in buying and selling it’s really pathetic.

    BARRICK was a big loser to this day for 20 years if you held it that long.
    Still hanging on to $20. Mostly all miners are about the same.

    However, this is where everything stands right now and has nothing to do with the future. The comparison was made based on market top to avoid any market timing and picking different time frames to make a case that this was good or bad because it’s been bad in gold, period.



      Sep 13, 2021 13:05 PM

      So buy STAWKS! Can’t lose lol.

        Sep 13, 2021 13:09 PM

        We’ll Ed, that was the wise thing to do for the last 30 years at least. Hard money crowd has been completely wrong.

    Sep 13, 2021 13:42 AM

    Summa Silver get drilling permit for Mogollon property in NM:

      Sep 13, 2021 13:54 PM

      +4 Nice to 4 drill rigs turning on Impact’s properties and the larger exploration program this year.

    Sep 13, 2021 13:24 PM

    AngloGold Ashanti Signs Definitive Agreement to Acquire Corvus and Consolidate the Beatty District of Nevada

      Sep 13, 2021 13:53 PM

      That was a good acquisition for Anglogold Ashanti to combine Corvus’s land and theirs. A number of folks are postulating that they may also make a cash offer to buy the Sterling deposit from Coeur as well to control the whole area, and CDE could use that cash at both Rochester and to expedite bringing Silvertip back on line.

      I was going to hold part of my Corvus position back to convert over to Anglogold, but due to the weakness in the rest of the PM sector in the summer, I ended up blowing out my KOR on July 19th for $3.12. KOR closed today at $3.15, so it doesn’t look like I left much on the table, and wanted to deploy those funds into other more beaten down stocks.

      Sep 13, 2021 13:54 PM

      Beware when Anglo lends a company money – they got Corvus very cheap. Not all buyouts are good things – this one took lots of potential from the shareholders.

        Sep 13, 2021 13:13 PM

        This buyout was pretty well telegraphed and expected though. When Anglogold, Coeur, and Corvus were all drilling right next to each other like crazy, then it was just a matter of time before (AU) or (CDE) made a move on the junior explorer/developer (KOR), and they were not going to hang onto that property for much longer. This was discussed a half dozen times here on the blog, that either Coeur or Anglogold would make their move in the next year, even in advance of the financing news.

        When Anglogold Ashanti put in the clause in that financing that Corvus couldn’t do any major transactions with other miners for 90 days, then that was the bell ringing, and where I added more to my KOR position. It was obvious that a buyout was bound to happen in that 3 month period and we had mentioned it a few times here on the blog. Clearly that played out right on the money.

        While buyouts typically rob the smaller company of future upside, this was a very easy one to add to positions on that financing news and wait for the nice premium on the takeover news. It provided anyone that wanted to take action a nice return from there or leading up to that in a tough market for the rest of the junior gold miners, that could then be rotated into more beaten down stocks, or held if investors wanted to stick with Anglogold Ashanti and keep riding it higher for the balance of the sector. Overall this was a win-win for both companies and investors whichever track they decided to take.

    Sep 13, 2021 13:27 PM

    Ex – perhaps the lesser folks just didn’t get that email.

    I date this issue back to Corvus taking the loan from Anglo. They shouldn’t have done it because of the clauses the loan contained. I believe the folks leading Corvus did not realized that they were putting themselves and their share holders in a corner. Those guys will do ok but it is the small shareholders that take it on the chin. My job now is to remember the names of Corvus leadership and know that they can’t ever be trusted in the future.

      Sep 13, 2021 13:36 PM

      Hi Mike – You and I chatted about it on the blog on July 7th (see below), but starting in May it was pretty obvious Corvus was getting taken over.

      Anyone reading the blog would have seen these posts:

      > On May 6, 2021 at 12:45 pm,
      Excelsior says:

      I’ve been waiting to see if would be AngloGold Ashanti or Coeur that started to make their move on Corvus, as they are all exploring there together in Nevada and all 3 companies seem to have some stunning results going on.
      I bet Corvus will get taken over before the end of the year, and it is looking like AngloGold Ashanti just stepped up their game…

      > On May 21, 2021 at 1:43 pm,
      Excelsior says:

      This was notable news earlier this month from Coeur positioning in Victoria Gold. I thought they may get more of a stake going in Corvus Gold, due to their proximity to Sterling project in Nevada (that they scooped up from Northern Empire), but AngloGold Ashanti beat them to the punch on Corvus taking out a 20% stake and blocking them from considering other transactions for 90 days. It is looking like AngloGold Ashanti may make a move on Corvus for a takeover in the next few months, so I’m holding onto my Corvus for that potential news but will then sell into that even (if it plays out that way). I was willing to hold onto the Corvus if Coeur moved on them, since I already hold a position in CDE.


      > On May 27, 2021 at 7:27 pm,
      Execelsior says:

      Nevada has a bunch of projects that could be consolidated as well. I had just opined a week or two back that Corvus, Coeur, and Anglogold Ashanti are all working feverishly to drill out projects on adjoining land packages. Initially I was thinking that Coeur may make a move on Corvus, to consolidate their projects. I was in Northern Empire a few years back when CDE took over their Sterling project, and this very close to Corvus’s Lynnda Strip & Bullfrog projects next door, so it seemed like a good union. However, then Anglogold Ashanti started drilling on the other side of Corvus and hitting paydirt, and now they’ve taken the traditional 19.9% strategic stake in Corvus, with a 90 day clause preventing KOR from doing any other major transaction, which has tipped their hand that they are likely going to takeout Corvus (and I’m guessing in the next 3 months).

      Then it begs the question of whether Coeur will keep developing Sterling as a stand-alone project, or flip it to AngloGold. The point being consolidation of projects makes a great deal of sense for the larger producers to ensure they have the mine life and scalability to make these projects worth the candle for them.

      > On May 27, 2021 at 7:32 pm,
      Excelsior says:

      Personally, I’d like to see Corvus run on good drilling for a while longer before AngloGold Ashanti makes a run at them, but if they pull the trigger over the next few months, then I’ll take the easy 40%-60% on a takeover offer, and rotate those funds into the next development story. Rinse and repeat.


      > On June 24, 2021 at 3:47 pm,
      Excelsior says:

      Well, I’m sure AngloGold Ashanti’s mouth is watering when they keep seeing Corvus hit long economic intercepts like this. By the end of this year I’m guessing that Corvus is taken over by AngloGold Ashanti, but until then I plan on enjoying the ride…. 🙂

      > On July 7, 2021 at 12:27 pm,
      Excelsior says:

      Speaking of buying and Anglogold Ashanti…. I’m hoping they buy out Corvus in the next 2 months. If so, I may hang onto the AU shares if KOR gets nabbed.

      > On July 7, 2021 at 9:50 pm,
      Excelsior says:

      Hi Mike. Well, like any trade, there isn’t a once-size-fits-all answer, because it depends on where traders got positioned as to how happy they’ll be at a buyout scenario.

      Personally I got positioned in KOR at $1.92 4 months ago, and KOR closed today at $2.71, so the trade is already well in the money for me at this point. If a buyout was announced tomorrow at let’s say a 40% premium from here to $3.79 then I’d be thrilled. I’d have the option of pulling profits for a nice gain, pulling partial profits and letting the rest convert over, or letting the whole amount convert over. I’d likely opt for pulling partial profits in some of that gain, and letting the rest convert to AU shares, in this hypothetical example.
      Most buyouts are in the 30-50% premium zone, so if that happened from present levels would be a nice upside in a short time frame for any investor that got in lower than current prices. That is a much better return than most generalist investors will make all year in their mutual funds, and I personally anticipate we may see something as soon as the next 60 days from Anglogold Ashanti making their move on Corvus. That’s just my personal opinion and definitely not investment advice.

      Really it would depend on someone’s goals with why they positioned in a stock and if they feel the acquisition robbed the company of much more upside, that won’t be the same in the combined entity. I still think there could be some nice upside after the takeover if shares converted over to AU, for the reasons previously mentioned to Matthew up above, and to his point on the rerating potential in Anglogold Ashanti to get more in line with valuations of other senior companies.

      There are however times, where investors feel the companies future gains are robbed during takeovers, as the larger company picked off the smaller company before it really has a chance to spread it’s wings and fly higher, or like in the example of the recent acquisition of my Roxgold position by Fortuna, I just didn’t see many synergies with the business combination, and would have liked to have seen a larger West Africa focused gold producer do the acquisition instead. If Semafo or Teranga would have acquired Roxgold, before they themselves got swallowed up into Endeavour Mining, then I could have gotten excited about those business combinations.

      For me personally with Corvus, I entered the stock 4 months ago based on their great drill results, and that they were happening in tandem with both Coeur Mining and Anglogold Ashanti both drilling like crazy right next to Corvus in Nevada on their respective properties. I figured KOR could run higher based on just drilling success, and also postulated that either CDE or AU would make their move on Corvus in a year or so. When Anglogold Ashanti just took that larger strategic stake in Corvus and put in a 90 day hold on Corvus doing any other major transactions with any other company, that showed their hand in my opinion.

      At this point with a 41% gain in place, and if another 30%-50% gain was stacked on top of that, then I’d be very happy with those returns on an investment in a 6 month period of time. If a different investor did something like buy into last summers peak over $3 hoping to get a multibagger, and then got taken out for a 30%-50% premium, then they may not be as excited. It’s all relative.

        Sep 13, 2021 13:45 PM

        Ex – I have been holding this stock for years. Perhaps trying to do long term investing in this market is just my mistake.

          Sep 13, 2021 13:56 PM

          Understood. Yes, this kind of cyclical sector is very difficult for longer term holding.

          My point in posting the up above was that anyone that wanted to could have averaged down (to lower their cost basis) or started a new position from early May to mid July and made an easy return on that capital invested playing for the 90 day window to a takeover offer. The drilling news was also a catalyst driving the stock forward during that period and Corvus delivered on that front as well for an extra kicker.

          Anglogold had telegraphed their intention to make an offer when they blocked Corvus from doing any other transactions with other miners for 90 days. There was already big speculation that Coeur or Anglogold might make an offer, so when that financing was announced, again, it was the bell ringing.

          We had talked about it again on July 7th, 5 days before the takeover was announced.

            Sep 13, 2021 13:11 PM

            Over the last year I’ve been in 7 takeovers and they’ve all been profitable exits, so they are still a more positive force than a negative one. They also free up capital to circulate through the sector, and it would be nice to see more acquisitions in the sector as a whole to keep the funds flowing, and increase the speculation on which companies will be next.

            The only one I didn’t like (even though it was also profitable) was the Roxgold takeover by Fortuna, mostly because, the synergies just didn’t make sense, and I wanted to see ROXG get their 2nd mine built and in production and get taken over by a larger African focused Gold producer (like Endeavour or Resolute or B2Gold). That was an example where the future gains got crimped short, but still a win is a win, and that money got rotated back into more undervalued miners.

            Ever Upward!

    Sep 13, 2021 13:39 PM

    By necessity, big companies like Anglo take a long term view of such acquisitions so I’m sure KOR represents a fine value but the average retail investor tends to take positions for much shorter term gains. I, for one, would be happy with the deal if I owned KOR. Not only is the offer at a 30 percent premium to last week’s close (24% premium to its all-time high), it’s happening near a very significant low for the sector so there is no shortage of exciting opportunities in which to redeploy. Such relative valuation is often a much more important consideration than an asset’s currency valuation. On top of that, I really like avoiding the development stage that KOR had coming. Development tends to be highly dilutive of existing shareholders and is fraught with other risks that could cause it to drastically underperform even if the whole sector is performing very well.

      Sep 13, 2021 13:41 PM

      From a technical perspective, today’s news almost certainly saved KOR from many weeks or even months of subpar action.

        Sep 13, 2021 13:50 PM

        Agreed Matthew. As mentioned above, Corvus had already run nicely on the drill news prior to the takeover announcement, for anyone that positioned before that program. The 30% kicker was just more upside from there and I’d mentioned that would be a nice win in the repost up above from July 7th. I had purchased at $1.92 and sold at $3.12 so, that’s a pretty solid trade. My reason for positioning was for drilling upside and the high likelihood of a takeover, and KOR delivered on both.

        You are correct as well that the takeover news, which was announced on July 13th, has kept the stock elevated the last few months from the high potential of weakness that would have ensued had it not been for that takeover underpinning KOR since mid July. That is another form of a win for anyone that has continued to hold KOR from mid-July for everything to be official (ie.. the lack of selloff the last 2 months was a plus due to the takeover offer.)

    Sep 13, 2021 13:08 PM

    Michael Boutros on Gold, Silver, and Oil (36:00):

    Sep 14, 2021 14:05 AM

    Tavi Costa – Stagflation to last next 6 months, markets in danger of sell-off

    David Lin – Kitco News – September 13, 2021

    “Several structural problems in the U.S. could cause a slowdown in economic growth soon, with stagflation hitting and lasting for the next six months,” said Tavi Costa, portfolio manager of Crescat Capital.

    0:00 – Stagflation
    6:10 – EM and China equities
    7:38 – Inflation
    8:50 – Gold
    11:30 – Miners
    14:10 – Sentiment for precious metals
    18:30 – 1970s vs today
    20:19 – Asset allocation

    Sep 14, 2021 14:18 AM

    This is from a few weeks ago, prior to the Jackson Hole event, but there were still some really solid points that Danielle made about the economy and Fed policy. I referenced this video in the interview above with John Rubino.

    Danielle nails it on why Inflation will not just be “transitory”, why housing prices keep rising, and why the “double-barreled” approach of having huge fiscal government spending in tandem with monetary policy from the Fed is going to have massive medium to longer term effects on the economy.

    Right after the 16 minute mark they point out why we are setting up for a Stagflationary scenario similar to the 1970s, a point we’ve brought up a number of times on this blog in the past, and that John Rubino eluded to in today’s daily editorial.

    The end Q&A rapid fire segment was particularly good with many insights shared. Definitely worth the watch or listen.


    Danielle DiMartino Booth: Fed Policy Mistake? Market Risk Rising

    Hedgeye – Sept 2, 2021

    Join Hedgeye CEO Keith McCullough and Danielle DiMartino Booth, former Fed advisor and Chief Strategist at Quill Intelligence, for this special investing discussion on HedgeyeTV.
    They’ll discuss portfolio positioning, broader market dynamics, and actionable investment ideas based on what the Fed has to say at Jackson Hole.