I've indexed everything to 2006 wow and you can see how how tight they are all three of them down here look at this there's not even room lost 5% the other one you've lost 11% versus they're all down right they're all down why would you hold this for the long [Music] term hi my name is alen hiber and I'm here today with the author of the world's number one bestselling book on investing and precious metals actually two best-selling books on investing and precious metals Mike Maloney how you


doing Mike I'm doing great yeah yeah so uh the the first book was from uh 2005 was when I was writing it and it came out in 2008 just before the global financial crisis and I had predicted the global financial crisis in it and some of the things I wrote in it are still unfolding uh and then the second book uh I came out with with earlier in 2023 and uh it is basically where the global economy is at right now and then shows the differences between the 70s bull market and the setup for today and


so uh anyway um one of the things that we talked about uh was the difference between mining stocks and the precious metals themselves and so you put together a little presentation for us right absolutely so there's one of these charts the first one I want to start with actually comes from your second book um because we did work together on that book a little bit uh and this is uh gold and the baron gold mining index both indexed to 100 uh back in August of 1971 so both assets start at the same


value and by the end of it you can see that there's a very clear winner gold is uh around 4,000 and the gold mining index around 400 yes you know if you divide those you'll find that it's uh it's like gold outperformed the mining uh sector The Baron's gold mining index by like 8.6 times or eight so it's almost nine times and here you're talking about the the physical asset that you can hold in your hand that has no counterparty risk uh when you invest in a Mining stock so I


just want to the reason I put this in the book and the reason I've covered this several times is I believe that the mining stocks are good for your gambling currency but not you don't want to start you want a foundation of uh because a few of the mining stocks will perform spectacularly well others won't some of them will go bankrupt uh and so uh this just shows that you if if you're trying to go toward precious metals for safety own the physical asset where you're not you you're not exposed to a mind


collapse to bad management to fraud to an EPA shutdown to a labor strike all of these different things that can happen to a company because you're buying shares in a company you're not buying gold and silver when you're buying mining stocks people need to remember that so this just shows the relative performance and if you can look on this chart one of the things you'll discover is that whenever uh gold Falls the mining sector Falls further and so you might have leverage on the way up where gold Rises


a buck and the mining shares rise two bucks but when cold Falls a by a buck the mining shares Fall by three bucks and that's the reason for this constant Divergence where gold is outperforming the mining shares and this you know this this is very very conclusive evidence going all the way back to when gold became freely traded August 15 1971 exactly this is a this is a long-term thing this is over 50 years of data um this is uh yeah like you say totally conclusive and I want to show the exact same data in a different way


it looks like this just expressing those two data sets as a ratio and they both start as 100 and you can see that by the end what this is showing is that the gold mining index as a percentage of gold ends up as only having 12% of the value of the physical metal yes and you know this was we did this uh the book was done toward the end of 22 and you updated all of the charts in the book uh just before we went to press on it so this is probably around October uh sep setember or o or October of 2022 uh and uh I would have a feeling


that if we updated this it would be even lower than 12 out of a 100 so you've lost what is that 88% the mining stocks have crashed 88% measured in Gold over that that period since August 15 1971 yeah and it's interesting earlier you used the phrase gambling currency and gambling is exactly what I thought of when I first put this chart together because it looks exactly like the gambling uh uh payoff rate when you run like a Monte Carlo analysis of a game like roulette or something like that


where you start like supposing you start with $100 you start at a 100 you might win some lose some you might even have a period where you're slightly ahead early on but then over time like the expected value You're Expecting to lose money you're expecting to go down over time and this is kind of the trend of what basically every casino game looks like wow yeah it's just gambling yeah like you might get lucky early on and do better than what you started with but it's very hard to sustain that so you


know the worst thing that can possibly happen to somebody is for gambling is to win right the very first time you try it and I went uh to Vegas with one of my best friends and his fiance and every time they walked past a machine and put a quarter in it jackpot they'd go to a blackjack table and W They just won one one one the whole trip uh there was nothing they could do to possibly lose currency then they get married and during the wedding there's people giving them cash gifts and so uh


they've got like 10,000 in cash and they're going to go on their honeymoon and I say' where you go going and he says oh we're going to go to Vegas and make some money they drove home that night because they had lost everything before they had gone to bed and they couldn't afford to stay in the hotel so they just drove home oh my I'm surprised they drove home I thought you said they were gonna lose the car too nope they kept the car oh let's go on with with your charts all right so


I've got four more charts here we can go through them fairly quickly and these are new these were not made for the book I made these special this week uh first I wanted to have uh gold and silver on a chart with the xaou hi I just wanted to take a moment and thank you for subscribing and mention that if you'd like to help our Channel please consider my company goldsilver.com the next time you buy precious metals we're one of the most trusted names in the industry our prices are sharp delivery is fast


and we have an insiders program where you find out exactly what I'm doing with my own Investments thanks for making goldsilver.com your dealer and now back to the video so the x is an index of gold and silver Miners And as you can see here um it was started in 1983 and by today in towards the end of 2023 it has severely underperformed the physical medal uh silver did two two and a half times as well two and a two to two and a half times as well and gold almost double that yeah the xou this is


the uh index of the larger mostly hedged uh gold and silver producers in the yeah okay go ahead yeah exactly so I just wanted to show that um and we can move on to the next one where I added to this chart the Hui and then reindex unhedged so they're not selling forward production as much and they're not hedging with Futures contracts and so on so that's the difference between the xou and the Hui the Hui uh should show up as being more volatile and when it's on an upswing it'll probably make bigger gains but


when it's on a downswing bigger losses so I love your hunch so the Hui was created in 1996 so I indexed everything to 100 in 1996 and wow look at this gold and silver up near the top and the two indices close to where they started up 12% down 15% which sounds like big moves but when you're talking about getting four times your money or five times your money you know 300 or 400% increases you know plus or minus 12 or 15 is practically nothing or losing 15% as you did with the xau being invested all that time but also


notice when when gold and silver were peaking back in 2011 the uh performance of the Hui versus the X it's much higher uh because they have not hedged everything and sold their production forward or sold a bunch of Futures contracts yeah exactly yeah and so now people say well what about the GDX and the gdxj surely surely those could be better Investments than physical gold gold or silver all right let's add the GDX to the chart and since that was in 2006 I've indexed everything to 2006 wow and you can see how how tight


they are all three of them down here look at this there's not even lost 5% the other one you've lost 11% versus they're all down right they're all down why would you hold this for the long term so here I've added in the GDX into what we were looking at before and that started in 2006 and so the GDX for anyone who doesn't know is an index of the big gold miners and the gdxj which we'll look at in a minute is the Juniors the smaller miners so here everything's indexed to 100 and look at this look how


tightly these three indices move together and they all end up below 100 which means you're negative right one is down 25% and another one's down 11% and the best performing one you only lost five% yeah amazing it is it is amazing and of course in that time since 2006 right silver doubled gold tripled those are the physical medals so I mean what I see here is it doesn't really make sense to own the indices of the miners over the long term right if you've got the correct guidance and you pick the


correct stock and you're in an upswing if all three of those things uh are fulfilled you need good advice uh and somebody that's going to do due diligence on the uh company companies that you're investing in and you pick the right company and you happen to be in a bull market for precious metals then there can be big winnings I I had I used to have 53 different mining stocks uh back uh before I I got out of them by 2010 because with the 2008 Global financial crisis they got slaughtered then they bounced back and I


was wondering why they dropped so much more than gold did and silver and I did that that was when I first did the study uh of the um The Baron's gold mining index divided by the price of gold uh to see the outperformance of gold and on that dead bounce where the accounts came back and and were worth something uh that at that point I unloaded all of them over a period of time and got out on that deadcat bounce and I'm so glad they did because all of those stocks that I was invested in that


I had made massive gains on one of them one trunch that I sold was a 40 beggar I made 40 times my investment but uh since then they're down uh some of them are out of business uh but the majority and and all of them are down and some of them are down like 90% or more yeah so I would have lost everything had I stayed in it yeah that sounds like uh a gambler story you know playing the roulette table you know you know 40x one time but then a lot of zeros so okay last chart I want to finish with is the Juniors as promised


so I just added the smaller gold miners to uh the chart here and that index started in 2009 so everything's indexed to 100 in 2009 and again all those indices are so tight you can barely distinguish them and the gdxj is went went from 100 down to 48 it's lost more than half it's value sense exception wow yeah amazing yeah and gold Silver's up 140% and gold is up uh or up 40% I guess yeah 40% yeah gold up 85 and that's just since 2009 right so this is the shortest time Horizon that


we've looked at today so yeah amazing and so I just want to uh you know I do not give advice but I tell people what I do and uh when I have I do own some very risky uh the this this is the gambling currency again so I gambled and I bought some very risky gold and silver explorers and a couple of producers that are not quite as risky but they're they are Juniors and uh so and I've got like a dozen of them and the reason for a dozen is one or two of them hitting big makes up for the others getting wiped


out completely and so uh I I am invested in it but I only used gambling currency my largest position is precious metals uh that of of everything that I own my entire net worth my largest position is precious metals and physical precious metals in insured storage or uh in my own possession so that's it yep and uh I have uh something similar except I still want to accumul more precious medals so for me it's gold silver and Bitcoin and I don't own any mining stocks or any other stocks uh and I I don't I don't


consider that I have gambling currency yet but you know eventually okay awesome yeah so thanks for your time Mike really appreciate it and thanks everyone for watching