Welcome to the regular Friday mailbag edition of The Daily Cut.
This is where your favorite analysts answer the questions you send in.
And one of the big themes we’ve been getting questions on lately is 5G wireless technology.
If you’ve been following along with us for a while, you’ll know it’s one of the profit megatrends our tech expert, Jeff Brown, tracks for his readers.
Most folks will know by now that it’s the new generation of wireless internet technology. It’s about 100 times faster than our current 4G networks.
And Jeff says it’s going to make a suite of sci-fi technologies a reality – including self-driving cars, AI (artificial intelligence) virtual assistants, remote surgery… even holographic projection.
But not a lot of folks know that work has already begun on an even more advanced way of sending information through the air – 6G.
Below, Jeff answers a question about 6G’s safety.
You’ll also hear from our globetrotting geologist and commodities investing expert, Dave Forest, on how gold mining stocks perform versus miners of other metals.
But first… the big theme we’ve been tracking all week is the rise of the crypto economy.
As world-renowned crypto investor Teeka Tiwari lays out in this video he put together from his home in Puerto Rico, the tech behind it’s about to spark a U.S. economic renaissance.
And one question we’ve gotten a lot lately is about the Grayscale Bitcoin Trust (GBTC). It’s an alternative way to gain exposure to bitcoin – from a trust rather than owning the coin in a digital wallet…
Reader question: I have heard about GBTC, which I understand is an ETF. Is it a viable way to get exposure to bitcoin?
– Mike R.
Reader question: What is your opinion of GBTC? Is it a decent substitute for holding actual bitcoin?
– Donald R.
Teeka answer: GBTC is not an exchange-traded fund, or ETF. It’s an investment trust you own through certain brokerage and investor accounts.
The reason you don’t want to buy the Grayscale Bitcoin Trust has nothing to do with its structure or the guys that run it. They’re all very credible guys. And they manage billions of dollars.
The problem with the GBTC is it trades at a huge premium to the price of bitcoin… Anywhere from 40% to more than 100%. In other words, you pay over the odds to own your bitcoin.
You can buy 40% more bitcoin if you open an account on Coinbase or Gemini and buy some bitcoin directly. These are two highly respected crypto exchanges.
GBTC was set up for Wall Street institutions – hedge funds, investment managers, etc. – that want exposure to bitcoin but are not allowed by regulators to buy bitcoins directly.
It’s done a good job for those types of people who cannot buy the coins. But if you can buy bitcoin on an exchange, and hold it securely in a digital wallet, why would you pay a 40% premium? It doesn’t make sense.
Owning bitcoin in a digital wallet is a smarter way to benefit from these coins than buying shares in GBTC.
Now back to that question on 6G wireless tech for Jeff Brown…
Reader question: Is 6G safer than 5G? And is it 98% made by the Chinese, just like 5G?
– Felice C.
Jeff’s answer: I hesitate to talk about 6G wireless technology for fear of confusing readers. After all, it sounds crazy to be talking about 6G with 5G just rolling out…
In March, industry experts met at the first major 6G gathering in Finland. That led to the recent launch of the 6Genesis Flagship Program. It’s an eight-year, $230 million project to develop, implement, and test the key technologies necessary for 6G.
By the way, it’s no surprise this meeting took place in Finland. That’s the home of Nokia. It’s one of the largest wireless technology companies in the world and a pioneer in wireless tech.
We may wonder why industry experts are already talking about 6G with 5G just now gaining steam…
Wireless technologies take about a decade to develop. It’s a complex process that requires an incredible amount of collaboration in the industry. To develop a next-gen wireless standard typically requires more than 100 companies working together and contributing their intellectual property.
Believe it or not, we started working on 5G in 2010… just as 4G was rolling out. So the new focus on 6G this early is normal. The same is true for each wireless generation.
As for what it will look like, 6G will require small-cell architecture like 5G. Except it will need even more cell towers and base stations. Just as 5G will require at least five times more cell stations than 4G, 6G will require more than 5G and operate at even higher frequencies.
That’s just what we need to get the deep network penetration necessary to deliver higher speeds and larger bandwidth. We can expect 6G speeds to be about 10 times faster than 5G. That puts us around 10 gigabits per second.
That might seem unnecessarily fast. For how we use today’s wireless networks, it is. But with more bandwidth and higher speeds come applications that utilize the newfound network capabilities.
And we can expect AI to be deeply sewn into 6G networks. AI will help manage what will be incredibly complex wireless networks. And it will enable incredible services above even what 5G will bring.
As for your questions…
Yes, 6G will be safe, just like 5G. It’s important to remember that wireless technology like 5G is already safe. It emits non-ionizing radiation. This kind of radiation is all around us.
These radio frequencies (RFs) have been used in radio, TV, and wireless networks. Regulatory agencies have been studying this area for decades. And there has been no conclusive evidence that 5G non-ionizing radiation is harmful.
As for China, this is another major misconception about 5G. Most people believe the U.S. is losing the 5G race to China. We have mostly the media to thank for this. Here’s a common headline that CNN ran back in 2018: “China is beating the United States in the race for 5G.”
The argument typically goes like this: There are only three companies in the entire world capable of building out the necessary architecture to make widescale 5G possible. Those companies are Sweden’s Ericsson, Finland’s Nokia, and China’s Huawei.
But there is no “American Huawei,” the pundits point out. Therefore, the U.S. must be falling behind in 5G technology.
There’s just one problem with this narrative. It’s utterly wrong…
I’ve worked as a technology executive going all the way back to the 2G era. And I worked directly with wireless tech during that time. So believe me when I say the United States leads the world in critical 5G technology.
If you were to open up a 5G base station, do you know what you’d find? You’d discover that this infrastructure is loaded with American technology and intellectual property.
That’s right, 5G infrastructure like base stations and antennas is made up of thousands of dollars’ worth of American tech… mostly American semiconductors. There is no other country that comes close to America’s dominance in this technology.
That’s what so few understand about 5G. America leads the world in critical 5G components. And I don’t see that changing with 6G.
We’ll wrap up today with a question on how you should treat gold relative to other metals in your portfolio.
For insight, we’ll hear from Dave Forest…
Dave is a “rock hound” (geologist) with more than two decades’ experience in the mining industry.
And his mission at our International Speculator advisory is to uncover junior mining companies that have the potential to double or triple in 12 to 24 months.
He’s given his readers the chance to make gains of 268%… 303%… 379%… 400%… and 497% on junior miners he’s recommended.
Now, one reader is curious how Dave thinks about gold versus other metals plays…
Reader question: When gold dropped $100+ an ounce (along with the gold and silver stocks), I noticed the other metals stocks did not follow and seemed to not be correlated.
Should I bucket these stocks as different types or market sectors? Are the lithium/nickel/copper stocks more like automotive tech? Thanks.
– Shannon B.
Dave’s answer: Good question. Thanks, Shannon.
Yes, they are different sectors. Gold – and other precious metals such silver and platinum – are protection in bad times. They often do well when things get worse.
By contrast, industrial metals copper, nickel, and vanadium are “good times” commodities. They do well when economic activity is flourishing, creating demand.
Right now, it’s the best of times… and the worst of times. Stock markets are flying. Tech companies are thriving. At the same time, unemployment is running high due to COVID-19. And global economies are shrinking at unprecedented rates.
With all that happening, shares in miners of ALL metals have been going up. We’ve seen surging rallies in stocks that mine for gold, silver, nickel, lithium, copper, and others over the last few weeks.
When the gold price corrected, gold stocks got hit – but other metals stayed strong.
In that way, these are somewhat of a hedge against gold, as you suggest in your email. But I expect commodities in general will more than likely move together – at least in the coming years.
That’s because of the massive currency creation happening globally. Central banks – including the U.S. Fed – are printing the equivalent of trillions of new dollars to stave off a COVID-19 economic collapse. That inflationary force should boost all metals – and commodities – just like in 2009 to 2012.
There’s another side to this. If we do get a stock market crash, everything will get hit. Shares in miners for gold, copper, the so-called battery metals (lithium, nickel, etc.) – they’ll all drop. In times of panic, investors sell everything. During past crashes, precious metal gold fell the least.
It still saw double-digit percentage falls. Gold also rebounded faster than other sectors. There’s going to be a lot of money made during the metals bull market. But you also have to be careful to guard your downside against a potential fall. And that’s where gold comes in.
Do you worry about the health impacts of 5G and 6G? Are you buying gold to protect your downside in another stock market plunge?
Write us, as always, at [email protected].
And don’t forget to check out the new video briefing I’ve started called The Weekly Pulse.
Every Wednesday, cohost Tom Beal and I will highlight what’s on the radar here at Legacy Research. And I’ll tease some of the new ideas we’ll cover over at our Legacy Inner Circle advisory.
It’s where we dive deeper into the big ideas we share with you at the Cut from Teeka, Jeff, Dave, and the rest of the Legacy team.
August 21, 2020