In a conversation exploring the collision of traditional finance and future technology, top Wall Street strategist Tom Lee described a crazy “black swan” scenario in which it is not the Federal Reserve but Elon Musk that upends the global financial system.
Speaking on SoFi’s live recording important part During the WNYC podcast, Fundstrat co-founder and director of research raised his eyebrows and floated various ideas about the asset, wowing the audience and eliciting smiles and laughs from co-panelist Michael Lewis. big shortand podcast host Liz Thomas, head of investment strategy at SoFi. Gold is not only a “Lindy Effect” asset, Lee said, but in Lee’s view, it is also a “demographic” story related to nostalgia. In all of this, he sees a “black swan” tail risk involving Musk, the world’s richest man, discovering a new asteroid and becoming the world’s central banker.
In Lee’s view, gold “may be a demographic story,” noting that Fundstrat conducted extensive demographic research and found that “preferences span generations.” For example, every 50 years there is another peak in sales of recreational vehicles (RVs) or recreational vehicles. He noted the spike in RV sales during the pandemic and said the last time sales were this strong was during the heyday of the 1950s i love lucy.
“Kids won’t buy what their parents liked,” he said, “but they will buy what their grandparents liked.” He concludes that gold “is a really big investment for baby boomers,” and that the golden generation X Enter the world of hedge funds and alternative investments.
Lee said gold is about the same size as the stock market and there is data to support his statement that the total amount of gold is “above the ground.” Valuation: US$29 trillion to US$34 trillioncompared to Magnificent 7 Market capitalization is approximately US$21 trillion.
“By the way,” he added, “all the gold in the world can be put into a swimming pool.”
Lewis commented that his palms were starting to sweat, “just imagining” the idea. “Your mind starts to water,” he said.
Lee went on to say that gold is a “Lindy Effect” asset: because gold has been considered a store of value for many years, it is still accepted that way. What could ruin this situation? This is Musk’s purpose.
Golden Black Swan Scenario
One of the major risks to gold is above ground.
“There is a million times more gold in the ground today than there is in the ground,” Lee estimated, nodding. It is estimated that most of the gold on earth cannot be mined. He believes that if gold becomes too expensive, perverse incentives will be created. “It’s like, literally, Mag 7 is about to get into the gold mining industry, right? Because you might as well just dig for gold. It’s more valuable than anything.”
He added that another major risk is that gold “is all alien” and acknowledged that gold’s origins are from meteorite hits earth. He said this suggests space companies may find more gold floating in space. “space exploration technology corp. “There could be a mission to Mars and hit a gold asteroid,” Lee told the audience. “And Elon Musk, if he… owned all the gold, he would be the new central bank.”
When asked about artificial gold, Lee agreed it was the third risk: alchemy.
Regardless, gold may have “peaked,” according to Fundstrat’s research, Lee added. Fundstrat has studied the ratio of gold to stock market capitalization over 100 years, and it typically reaches 150% before falling back. Fundstrat noticed that the price of gold fell by 9% on January 30. A review found that gold only fell by more than 9% in a single day three times, and these three times it reached a peak.
“So I don’t know, but if history is any guide, it’s probably already over the top,” he said.
Lewis then revealed how he made a fortune by taking a stake in the gold trade through an old poker buddy from New Orleans.
old poker friends
“When I had it, I think I was going to be terrified for a long time,” Lewis said of the yellow metal. “This is a doomsday deal.”
Lewis revealed that although he is a proponent of passive index fund investing, he accumulated a large gold position after a conversation with a former poker buddy turned fund manager, with whom he lost touch for years before reconnecting during the reporting period. big short. Lewis recalled seeing his friend’s collection of ancient Roman coins.
“He showed me how the emperors devalued their currencies over time. There was less and less silver. Then he gave me a long lecture about buying gold,” he recalled. “It’s very telling. Like, I don’t do this. I don’t buy gold. It’s crazy. It’s like crazy. But I can’t get it out of my head.”
Finally, three years ago, Lewis said, he “bought a bunch of gold.”
“It just kept going up, up, up,” Lewis said, adding that he felt extremely guilty and that he wasn’t advising anyone to do it, but decided to invest the money back into his friend’s fund.
“What he’s doing is buying gold mining stocks, and he’s a lot smarter than me at that,” he added. “It’s a cheaper way to buy gold.”
Lewis said “unstable political conditions” and widespread global anxiety are the main drivers for his gold holdings.
“I don’t see any reason not to be afraid,” Lewis admitted. “And I don’t think being long fear is a bad thing right now.”
This story was originally published on wealth network