What Gold and Silver Stocks I'm Buying | Clive Thompson and Jimmy Connor

Key Concepts

• Swiss Economy: High cost of living due to strong Swiss Franc, high demand for housing, and high salaries for qualified professionals.
• Gold Market: Significant price appreciation in 2024 and 2025, driven by uncertainty in the US Dollar, central bank buying, and public interest in ETFs.
• Gold Equities: Undervalued price-to-earnings multiples, potential for rapid profit growth due to rising gold prices, and a "double whammy" effect of increased earnings and higher valuation multiples.
• Silver Market: Rising price driven by supply deficit, increasing industrial demand (electronics, solar panels), and potential government stockpiling.
• Artificial Intelligence (AI): Transformative technology with potential for job displacement, increased efficiency, and new skill requirements (prompt engineering).
• Tokenization: The process of converting real-world assets into digital tokens on a blockchain, already existing for gold.
• Investment Strategies: Focusing on undervalued assets, identifying catalysts for price appreciation, and utilizing AI for analysis and program development.

Switzerland: Economic Landscape

The Swiss economy is characterized by a strong Swiss Franc, which makes the country expensive for newcomers. Despite this, there is high demand from individuals seeking to live and work in Switzerland due to significantly higher salaries, even for roles like qualified secretaries compared to bank managers in other European countries. However, this demand is met with a severe housing shortage, with accommodation being completely full and prohibitively expensive. This creates a dilemma for those attracted by high salaries but unable to find affordable living spaces, despite being permitted to enter under EU and FA rules.

Gold: A Rising Star

Gold has experienced a remarkable year, with a 25% increase in 2024 and over 50% by mid-2025, exceeding many predictions. Major banks are now forecasting gold prices to reach $4,000, potentially very soon. The long-term outlook for gold is highly positive, though its ascent is not expected to be linear.

Drivers of Gold's Ascent:

• US Dollar Uncertainty: A pervasive feeling of uncertainty surrounds the US Dollar, stemming from tariffs, political agendas, and the "weaponization" of the dollar. This leads dollar holders to seek safer alternatives.
• Safe Haven Demand: Investors are looking for safe havens, and with assets like Nvidia no longer considered such, gold is attracting capital seeking lower volatility and greater security. The certainty that gold will retain its value and purchasing power is a key driver.
• Central Bank and Public Interest: While central bank buying has slightly decreased from previous highs, they remain steady purchasers. Additionally, there's a growing trend of public investment in gold Exchange Traded Funds (ETFs), indicated by an increase in the tonnage held.

Gold Equities: Undervalued Opportunities

Gold mining stocks are currently presenting attractive investment opportunities due to their reasonable price-to-earnings (P/E) multiples, often in the low teens, compared to the broader stock market's P/E of 25.

Key Advantages of Gold Mining Stocks:

• Profit Growth Potential: The rise in gold prices is expected to translate into significantly higher profits for mining companies. While forward sales might have locked in lower prices for current production, as time progresses, current higher prices will impact the bottom line.
• "Double Whammy" Effect: Investors can expect a dual benefit:
  1. Increased Profits: Higher gold prices directly boost earnings per share.
  2. Higher Valuation Multiples: As companies demonstrate a track record of growth in sales and earnings (potentially 40-50% year-on-year), investors are likely to apply higher P/E multiples, further driving up share prices.
• Undervaluation: Despite recent gains, many gold mining stocks are still considered relatively cheap compared to their future profit potential.

Notable Gold Equity Examples:

• Murchison Inc. (MUR): A gold and silver mining company led by Rob McEwen. It also holds a significant stake (approximately 47%) in Murchison Copper, which is developing a large copper project in Argentina. The completion of a feasibility study for the copper project is anticipated as a catalyst for share price appreciation. The company benefits from higher gold and silver prices, with future potential from copper demand driven by electrification.
• Ramelius Resources (RMS): An Australian company that recently acquired Spartan, a company with substantial gold resources but lacking the capital for extraction. Ramelius has a strong cash position and projects a significant increase in gold production by 2030.

Silver: The Underestimated Metal

Silver has seen a 60% increase year-to-date and is nearing its all-time highs. Its price is expected to surpass previous records in the near future.

Drivers of Silver's Price Increase:

• Supply Deficit: For several years, mine supply has been less than industrial demand, necessitating recycling to meet needs. This deficit inherently drives prices higher to incentivize the retrieval of existing silver.
• Industrial Demand: The electronics industry, a primary consumer of silver, is expected to continue its growth.
• Strategic Mineral Status: The US government has designated silver as a strategic mineral, potentially leading to the rebuilding of its strategic stockpile, which was depleted. This is partly due to concerns about securing supply from Mexico.
• Solar Panel Industry Growth: China's efforts to stimulate its economy, particularly through the solar panel industry, are a significant driver of silver consumption. The solar panel sector saw a substantial increase in silver usage (around 30% in one year) and continues to be a key demand factor.
• Investor Demand: The Silver Institute estimates 200 million ounces will be bought by investors this year. However, this figure is considered a potential underestimate, given the global population and the increasing awareness and participation in silver purchases driven by price movements and social influence.
• Gold-Silver Ratio: Historically, the ratio of silver to gold prices has been around 2% (or 50:1). With gold at $4,000, silver, at $80, would still be considered undervalued by some technical analysts.

Notable Silver Equity Examples:

• Fresnillo PLC (FRES): The largest silver producer globally, mining in Mexico.
• Pan-American Silver: A major silver producer, likely the second largest.
• First Majestic Silver Corp. (AG): Another significant silver producer.
• Silvercorp Metals Inc. (SVM): A silver mining company.
• Endeavour Silver Corp. (EXK): A silver mining company.
• Santa Cruz Silver Mining Ltd. (SCZ): A silver mining company.

Tokenization of Assets

Tokenization, the process of converting assets into digital tokens on a blockchain, is already a reality for gold. Cryptocurrencies like Pax Gold and Tether Gold (or similar offerings) allow for the exchange of gold for crypto and vice versa, typically tied to good delivery bars. While not practical for small retail investors due to the large bar sizes, these tokens benefit from arbitrage mechanisms that keep their price aligned with the underlying gold price.

Artificial Intelligence (AI): A Transformative Force

AI is poised to bring about profound changes, comparable to the advent of email and the World Wide Web. It is described as a "freight train" arriving rapidly, with significant impacts on individuals and industries.

Impacts of AI:

• Job Displacement: AI is already leading to job losses in sectors like translation and potentially in areas requiring data analysis and report generation. Companies like Nova Nordisk and Salesforce have announced layoffs, with AI efficiency cited as a contributing factor.
• Increased Efficiency: AI can drastically reduce the time and human resources required for tasks. For example, a report that previously took 50 people five months can now be completed by three people in a week.
• New Skill Requirements: The rise of AI necessitates new skill sets, particularly in "prompt engineering" – the ability to effectively communicate with and guide AI models. This involves understanding which AI to use, cost per token, framing questions, providing context, defining the audience, specifying output format, and iterating on prompts.
• Democratization of Programming: AI tools, combined with programming languages like Python, are enabling individuals with limited programming knowledge to create sophisticated applications, potentially impacting the demand for traditional programmers.
• Competitive Advantage: Companies that effectively harness AI will gain a significant competitive advantage over those that do not, as AI offers 24/7 operation, no holidays, sick days, or demands for pay raises.

AI and Employment:

The increasing capability of AI to perform tasks previously done by humans, including complex analysis and report generation, is leading to a reassessment of the value of traditional university degrees in fields like computer science. The unemployment rate for computer science graduates is noted to be higher than for some other disciplines, suggesting a shift in the job market.

Investment Strategies and AI Tools

The discussion highlights the potential for significant returns in the stock market, described as having "low-hanging fruit." Key strategies involve identifying undervalued assets and catalysts for growth.

Utilizing AI for Investment Analysis:

• ChatGPT and Similar Tools: Advanced AI models like ChatGPT, Grok, and Manus AI can analyze company reports, earnings calls, and financial data to forecast future earnings and potential share prices. Users can input specific parameters, such as a target gold price and P/E ratio, and the AI can perform complex calculations.
• Prompt Engineering for Investment: A template or guideline for AI prompts is available by contacting Clive Thompson on LinkedIn. This resource aims to improve users' ability to harness AI for better results, moving beyond simple requests to more complex and nuanced instructions.
• Investment Company Analysis: A specific strategy involves identifying investment companies trading at a significant discount to their Net Asset Value (NAV). Catalysts, such as court case victories (e.g., Grayscale Bitcoin Investment Trust) or announced liquidations, can lead to the closure of this discount and substantial profit.
• AI-Assisted Programming: Clive Thompson shares his experience of learning Python and then leveraging AI to build programs, including a chess program, email readers, stock analyzers, and internet research tools, without extensive programming knowledge. This demonstrates how AI can empower individuals to create complex solutions.

Favorite Ski Resorts in Switzerland

For those seeking to ski in Switzerland, popular and heavily English-speaking resorts include:

• Crans-Montana
• Zermatt
• Verbier

These locations offer excellent ski slopes, ski schools, and a high level of safety and quality, though they come with a premium price tag.

Clive Thompson's YouTube Channel

Clive Thompson hosts a YouTube channel focused on investments, drawing from his 50 years of experience in the stock market. The channel aims to teach viewers about various aspects of stock investing, including how to make money, pick the best stocks, analyze them, and utilize specific techniques. Recent videos have covered strategies for making money quickly in the stock market and identifying investment companies with catalysts for significant price appreciation.

Conclusion

The discussion underscores a dynamic economic and investment landscape. Switzerland presents a high-cost, high-reward environment. Gold and silver are experiencing significant price appreciation driven by a confluence of economic and geopolitical factors, offering attractive opportunities in both physical assets and equities. Artificial intelligence is emerging as a powerful, disruptive force, reshaping industries and the job market, while also providing new tools for investment analysis and personal productivity. The key to navigating these changes lies in adaptability, continuous learning, and the strategic application of new technologies.