Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Metals Ups and Downs

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This week, gold and silver continue to make sweeping historical moves. On one hand, the gold price broke through first $1850, then $1900 within two days. On the other hand, the silver price exceeded $20 on July 20th, then saw $21, $22, and $23 in the following days. Although the silver price doesn’t seem much more significant as compared to the gold price, silver actually increased faster. Therefore, silver is currently outperforming gold. So what caused this monumental change with gold and silver?

Precious metals such as gold and silver are “safe haven” assets. This is because these metals are precious, highly liquid, low-risk, and carry their own values. Since the production of precious metals is controlled, their supply is balanced, which helps retain their prices. However, COVID is one major factor that helped spike precious metals’ prices. In addition to gold and silver, platinum is up this week.

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Munger’s Moats

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Charlie Munger is famous for stressing the role of moats in successful investing.  He argues that only strong moats allow a business to earn returns in excess of the cost of capital for substantial periods of time.  The big problem is maintaining a moat.  Potential competitors, eyeing those excess returns, will want to enter.  What is worse, they will target those aspects of an incumbent’s business that are the most profitable and offer the best opportunities for growth.  Technology serves to exacerbate the difficulty of maintaining a moat.  It often allows an entrant to use software and electronic communication to reduce the cost of grabbing an incumbent’s most profitable business.

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Best Short Sellers

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Short selling has been around for centuries. Dutch traders were shorting tulips at the peak of the Tulip Mania during the 1630s. But short selling stocks these days has become far more complicated. For one, the stock market has typically gone up in the long-run. Regulators also tend to step in to restrict short selling in one way or the other, especially during a crisis. But some activist short sellers have generated stellar returns on their campaigns. Here we take a look at the activist short sellers with the highest average campaign returns between 2013 and 2020.

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The Great Dollar Short Squeeze

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Gold prices pulled back today, but that may only be a temporary situation if one expert is right about the dollar short squeeze. Daniel Oliver of Myrmikan Capital said in a note this week that the value of the U.S. dollar is being held in place by a short squeeze, which is only temporarily holding gold prices back.

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He expects gold prices to eventually soar into the “multi-thousand dollars per ounce,” although he doesn’t expect a smooth ride to get there.

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Gold and US/China Conflict

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In January, progress on the US-China trade deal seemed to calm the trade war between the two countries. However, everything changed when the corona-virus emerged. Since the beginning of the pandemic, demand—and resultant spot price for silver and gold—reached new highs. The stock market fell and rose several times in the hopes and doubts for a vaccine. Although politics and gold bullion might not seem to have much in common, the gold price is inherently tied to political events. After all, it is deemed a safe-haven metal for a reason. So how do current events affect the 9-year high gold price?

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