Michael Siperco is the senior research analyst for global metals and mining at Velocity Trade Capital, focused on precious metal commodity commentary, thematic senior producer sector research, and coverage of emerging developers and junior producers. He joined Velocity in 2019, after 13 years in progressively senior roles at Orion Securities, then Macquarie Capital Markets Canada. He has covered all segments of the mining industry, from explorers/developers to large cap global diversified senior producers, precious, base and bulk metals, as well as royalty/streaming companies.
“I was born in Canada, but my parents immigrated from behind the Iron Curtain. That meant that from a young age I understood the power and control governments can exert over not just the big stuff, but everyday life. The arbitrary laws, policies and edicts that can change fortunes on a dime, picking winners and losers, separating the rich from the poor, the bankrupt and dependent from the prosperous and free. All in the name of whatever political ideology or economic theory is in vogue at the time.
The chaos of revolution in Eastern Europe and the fall of the Soviet Union 30 years ago put those lessons in stark terms. What people knew, what they had based their lives, their careers, their fortunes on for decades vanished with a few strokes of a pen. Entire financial systems collapsed overnight. Currencies became worthless. Laws and rules were rewritten, or downgraded to mere suggestions.
I heard stories and knew people and families whose net worth overnight became a function of how much gold jewelry, or old coins they’d managed to save. Smuggling kruggerands, sewn into the lining of their suitcases, or trading gold bracelets for apartments, land. I learned the value of gold as barter, and its power as a currency, as a store of wealth beyond the control of any government, central bank, or official exchange ratio. A fundamental building block of human economy, and a truly global unit of account when all else fails. It’s a lesson that many in North America and Western Europe have never learned, or at least never internalized.
Over the last 10-15 years, between economic crisis, changing geopolitics, and of course the global pandemic, a new, overdue, reckoning seems to have started about money and economics, about value and fiat currency. There’s no better evidence of this than gold’s climb to all-time highs, and the emergence of more alternative stores of value including, of course, bitcoin and the cryptocurrencies.
I bought my first physical gold at around $300/oz in the 1990’s, and my first mining stock not long after, in the middle of the (first) tech bubble. When I later married into an Indian family, I started to appreciate the generational transfer of wealth, not in dollars, or rupees or stocks, but gold.
I buy gold today for the same reason. Not to sell it or trade it for fiat currencies (there are plenty of other things to trade), but to hedge my bets, insure my other assets, and ultimately to pass on to my children. As a plus, no matter what other alternatives may come or go, it’s impossible to beat the look and feel of a newly minted gold maple leaf in your hand”.