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Krista Dibiaz (0:57)
Welcome to Ask an Advisor. Where we here at Team Clark go deeper on all things investing with fiduciary. Wes Moss. So good to see you, Wes. Today's topics are great. I feel like a lot of people are going to be interested in both of these things. First, gold, gold, gold. I like gold. Austin Powers. Everyone asks. I mean we get so many questions about gold. I've heard Clark's take. Very interested to hear your take. I don't know what it is yet. And then later, something that Clark and I have kind of gone around and around about AI and I also would throw in robotics jobs and jobs. There was a recent headline that over half of 50% of white collar jobs could be lost in the next entry level.
Wes Moss (1:40)
But still it's a giant number. I did the math on that. It could be. If that comes true, 50% of entry level jobs in the next five years could be 9 million jobs in jeopardy.
Krista Dibiaz (1:51)
So we're going to talk about that as well.
Wes Moss (1:53)
Okay, well, let's get going. Let's, let's start with gold. Look, gold's been around for thousands and thousands of years. So it's, this is nothing new. We all know exactly what gold is. Of course, I think most of our listeners and viewers know that you can invest in gold. There's a couple different ways to do it. You can buy gold bars, gold coins, gold bullion, so physical gold, keep it in safe. Or you can buy an ETF that tracks gold. And there's several ways to do that. So it's very accessible today. The question is, is it a good asset class? And there really is some controversy around that. And I would say not really controversy, just there's Not a consensus that it's a, a great long term asset or not. So what's I think most interesting more recently is the price of gold has gone up pretty dramatically as we sit here today. It's around $3,300 per ounce. When I, in the early years of the investment business go back 25 years, gold just lingered and lingered and lingered. There was a period of time that was almost a 25 year slog that gold went from 500 an ounce and filtered down a little bit and then went back to 500 all over the course of 25 years. And so essentially flat. And remember, gold doesn't pay any sort of dividend. There's no interest, there's no dividends, actually cost to store it. So I think that the re emergence of interest around gold is because the price has gone up a lot lately. So people are saying, wait a minute, why, why don't I own more gold? So I wanted to just look at a chart, I think that tells the story about the price of gold because again, you're owning it as a store value and for some appreciation, again you're not getting any income. So how should you own it? How much should you own? And there's no perfect answer. This is just kind of my opinion on this. The first thing I would go back to and I've thought about for the last 25 years is what is Warren Buffett's opinion on gold? And he has famously said a bunch of lines over the years because again, he has never really owned gold. I think there was a period of time where he owned one of the gold mining companies, but that was a relatively brief period of time. Is that gold? What does gold do? It just sits there and it stares at you. One, two. Not only do you not get paid from gold, but you have to pay somebody to store the gold. So it actually costs money. It's like reverse rent to own gold. The next line that I always remember, I think is fascinating is that he would, Warren Buffett would rather, he said he would rather own all the farmland in the US versus all the gold in the world. That's pretty serious statement. Now again, when he looks at it, you own farmland, you've got crops and you've got something coming in and you've got income coming in every year. And whether you do the math on that or not, that's just emblematic of how this guy thinks about it. So he's been consistent for 50 years plus about not really wanting to own gold. However, the gold industry is massive price of Gold has gone up. So people are interested in it. If I were to look at a chart and just tell the real story, I mean, this is what's happened. If I go back to call it 1980, approximately gold hit 500 bucks an ounce and then over the Next call it 25 years, it filtered down to 300, $350 an ounce, only to get back to 500 in around call it 22,005. So 1980 to 2005 gold went from 500 to 500. So you didn't make any money. In fact, you were losing money for a lot of that period of time. Then it kind of rebounded. Then from 2000 to 2011, it had a big run and went from 500 to 1700 an ounce. Then it went back down to 1100 an ounce and. And now it's kind of shot up to 3,300 an ounce. So the reason, if you zoom completely out, what is that rate of return? If you would have just bought it back in the let's call it 1980 and just held it until about where it is today, it would be about an 8.4% rate of return. Pretty good. So if you look at the economic history, if you've had the patience and you've held it this whole period of time, so that was super long term hold. You made money. It's hard to argue. The problem is when you have an asset that is supposed to be a store of value, it doesn't necessarily act like that when you've got that much volatility. So I think that if you're going to own gold, I would be prepared for some pretty serious volatility. Here's some of the numbers. 80% spike in the 73 to 75 recession. A 50% loss from 1980 to 82, a 30% jump in 2020, a 35% loss from 2011 to 2015 and a 65% gain from 2020. So that to me doesn't sound like a sleepy asset. Over time it sounds like a sleepy asset. 8, 8.4% pretty good. Just know that it's volatile. The other thing that I have to give gold credit for, if I go back and look at recession period. So when the economy's not doing well and people are nervous and scared and stocks are not necessarily doing well, gold does hold up pretty well. So if you look at periods of time during recessions, Krista, these are the shaded lines. Back in the 70s, gold pretty flat. The early part of the 90s, pretty flat during the recession. 2000 pretty flat during the recession, during the financial crisis, relatively flat. So I will give it credit as a, as an asset that you can invest in. It does seem to kind of hold up when the economy is getting nerve wracking. But it's also not this perfect elixir. I remember hearing a gold commercial, I think it was on the radio and it said gold, you know, buy gold for inflation, buy gold for deflation. Buy gold in a bad economy, buy gold in a good economy. There's this thought that it's this perfect asset that does, does well no matter what. That's just not true. It's super volatile. But it has been good over time. So knowing if, if you take all that into account. My take on it is, first of all, I know that some people want to own physical gold and I don't blame, I don't blame investors for doing that. You literally want the gold bars and you want to put them in a safe and that nobody can take that away from you. So I get that more logistically where I've invested in gold ETFs, so that I think is my preferred way to do it. It's still a financial derivative that tracks the price of gold. Supposedly it is backed by physical gold. I haven't been to the Fort Knox or wherever it's held to see it. But the gold ETFs, at least some of the gold ETFs are really, supposedly backed by physical gold. So my take on it is 5% ownership of your total investment pie is totally okay. If you really, really like some sort of quiet asset during tough economic times, knowing it's going to be volatile, other times maybe even go up to 10%. That's too rich for my blood, but I'm okay with five. So that's my take, 5% gold.