I’ve got a few Real Money Portfolio updates for you today, but first I wanted to check in on a teaser that a few folks have asked about…
Dr. Stephen Leeb is a familiar name in newsletterdom, he has been helming newsletters from a variety of publishers for decades, and it seems he has again shifted publishers — he’s now selling a service called Real World Investing through Investing Daily, and he’s got a lurid promise to draw you in:
“You’re just one click away from discovering my #1 gold stock that will give you the opportunity to multiply a $10,000 investment into a $100,000+ bonanza…”
There are lots of investments that give you the opportunity for a 900% return like that, of course, but “opportunity” is a very squishy word. So what is the actual stock he’s pitching?
His argument starts with the premise that we’re going to see gold go to $20,000 because China will be cornering the market and will begin to use gold to back the Yuan, which is how they’ll wrestle the global financial system away from the US dollar and give themselves more influence (we’ve heard this story before, of course, and China has been much more aggressive and secretive in building up gold reserves than any other major country… though it’s very difficult to imagine any government, let alone an authoritarian one, giving up control of its on currency, which is what going to “gold backing” means)
So I’m a little skeptical of that “China will back the Yuan with gold and put us back on the global gold standard” argument — I think that genie will be awfully hard to put back in the bottle now that politicians around the world have enjoyed 50 years of unthered currencies and the ability to promise to pay out more in benefits than they receive in taxes.
But still, we could have a return to what James Grant would call monetary sanity and go back to a “hard currency” world… which might, depending on how it happens, mean a rise in the price of gold (it could also mean a completely regulated gold market, with unpredictable results). And gold does double, triple, quadruple or more from here, well, you’d have a hard time NOT getting a 900% return from any halfway decent gold mining stock.
But I’ll ignore Leeb’s wilder big picture arguments ...