Gold, cryptos, pre-IPOs deals, 5G wireless tech, electric vehicles…

These were the investment themes on readers’ radars for this week’s Friday mailbag edition of The Daily Cut.

If you’re joining us for the first time… welcome aboard!

Our mission is to bring you the best moneymaking ideas, insights, and recommendations from the team of analysts at Legacy Research.

The mailbag edition is where you get to put questions to your favorite analysts.

Maybe you want to ask Teeka Tiwari a question about cryptos… or Jeff Brown a question about tech… or E.B. Tucker a question about his 5G warning.

Whatever is on your mind, you can always drop us a line with your thoughts at [email protected].

First up this week, a quick question for Palm Beach Research Group cofounder Tom Dyson. It’s about one of the big themes we track here at the Cut – the rally in gold.

As his followers know, Tom recently sold everything he had and went all in on the gold rally he sees coming.

Reader question: Do you own mining shares, precious metal indexes like GDX, or just the hard asset?

– Anonymous

Tom’s answer: I have 60% of my portfolio in pre-1933 U.S. gold coins and 40% in a cheese board of gold and silver ETFs and some popular gold royalty companies. That’s the most specific I can be.

My main investment recommendation would be physical gold, supplemented by ETFs, gold mining stocks, and silver investments, depending on your experience as a speculator.

Another of the big themes we’re tracking for you is the buildout of the crypto economy.

Colleague Teeka Tiwari first recommended bitcoin to readers of our Palm Beach Letter and Palm Beach Confidential advisories in April 2016.

And as he told us this month… he believes the gains are just getting started.

One of the most common questions we field from readers is about how to handle paying taxes on your crypto holdings…

Reader question: Could you recommend any tax, legal, or financial resources to help me keep my crypto windfall gains when this boom happens?

– Bryan T.

Teeka’s answer: Let’s get some misconceptions out of the way… A common one is that cryptos are not taxable investments. Another is that crypto is completely anonymous and untraceable. Both are incorrect.

According to the IRS, all crypto investors who have crypto capital gains MUST pay taxes just like with other assets. Since 2014, the IRS has been persistently looking for new ways to control crypto and enforce crypto taxation. So, it’s important you accurately record all your cryptocurrency transactions and include them in your tax forms.

My recommended crypto tax software is ZenLedger. It helps you with a full audit package, Form 8949 and Schedule D, as well as income reports from mining, staking, and interest-bearing crypto. These reports help you optimize your tax burden, so you have the most cash possible to keep in your portfolio.

On the flip side, if you lose money on your crypto investments, you can write them off on your taxes like any other investment.

Important note: I do not provide tax, legal, or accounting advice. This is general tax information. You should consult your own tax, legal, and accounting advisors regarding your specific financial situation. Furthermore, neither my publisher nor I have any financial stake in ZenLedger. And we don’t receive any payment for recommending it.

Next up is a great question about Phase Two of the 5G rollout our tech expert Jeff Brown has been telling readers about…

Reader question: Hi Jeff, I heard the lecture you gave on the 5G boom about six months ago and could not get it out of my mind. I was in a position in December to finally do something about it. I am new to investing and am a new subscriber to all your services. I have found your work and insights into this “Brave New World” very exciting. It’s empowering to know I can act on solid, dependable information from you.

I have a question about the 5G devices that are available now. I am wondering if these devices will be capable of running all the services/apps that have not been developed yet. Would it be better to wait until the 5G services are available to buy a phone? Thanks so much for all your hard work.

– Robin J.

Jeff’s answer: Thanks for writing in, Robin. And thanks for joining me as a subscriber. I’m happy to have you on board.

Just to get all readers up to speed, 5G is the next generation of wireless technology. And this new network will be – on average – 100 times faster than our current 4G network.

Back during my days as a high-tech corporate executive, I worked extensively with wireless operators around the world in more than 30 countries. These network rollouts always happen in three phases:

– Phase One: The Infrastructure Phase

– Phase Two: The Devices Phase

– Phase Three: The Services Phase

Right now, we’re well into Phase One. And Phase Two kicked off last year when 5G-enabled devices went up for sale. Some of the 5G handsets available include the Samsung Galaxy S10 5G, the LG V50 ThinQ, and the Motorola 5G Moto Mod.

But back to your question, Robin… Should you buy one of these early 5G devices? Or should you wait for a later version with more refined features and applications?

I recommend holding off until this fall. We can expect that Apple will announce its 5G-enabled iPhone in September, with availability to follow in October or November.

In addition to the 5G iPhone, there will be a number of new models from other phone manufacturers hitting the market.

And I have seen strong progress from second-tier semiconductor companies to produce lower-cost processors for 5G phones. That means that we should also start seeing midrange 5G smartphones before the end of the year.

This will give consumers more options.

There is a more nuanced answer, however.

Some of the early 5G phones use modems that could soon be obsolete. These chips are able to access only certain radio frequencies 5G uses.

The Note 10+ 5G, for instance, uses Qualcomm’s X50 modem. This modem can tap into the ultrafast millimeter waves.

But these modems can’t use sub-6 Ghz networks that network providers like AT&T and T-Mobile favor. Sub-6 Ghz networks aren’t as fast as millimeter-wave networks but offer greater range from cell tower to phone.

To put it simply, many of the early 5G handsets can use early 5G networks. But as the networks are built out and expand, many of these early phones won’t be able to make full use of the networks.

The answer will also depend on whether your hometown is an area that will receive 5G wireless network coverage within 2020.

Obviously, if you live in a town that doesn’t have 5G coverage yet, there isn’t much point in having a 5G-enabled phone. In that case, it would be better to wait.

Regarding apps and services, in general, any 5G-enabled phone will be able to enjoy new services 5G wireless networks enable. I say “in general” because most 5G-enabled phones will have similar sets of components that provide very similar service capabilities.

This is where purchasing a higher-end 5G-enabled phone is a better route.

For example, 3D sensors are going to be in pretty much all high-end 5G-enabled phones. Having 3D sensors enables some incredible features with augmented and mixed reality.

Again, my strong preference is for Apple’s 5G-enabled iPhone, due out later this year. It will have all the necessary components and performance to provide a seamless experience for all its users.

And from a phone-security perspective, Apple’s iOS is far more secure than an Android-based system. Apple, as a company, strongly emphasizes data privacy (unlike Google, which surveils and collects our data and sells it for a profit).

But 5G isn’t the only breakthrough tech Jeff’s readers are profiting from at his advisories. He’s also bullish on electric vehicles (EVs).

In fact, Jeff has stirred up controversy with his bullish stance on leading EV maker Tesla (TSLA).

And readers have plenty of questions about what our EV future will look like…

Reader question: With the accelerating transition to electric vehicles, no one appears to be addressing the necessary electricity production to charge them. Power companies are certainly not on a building spree. Solar panel on every car roof? How many sunshine hours are required for each driving hour?

– Warren K.

Jeff’s answer: Warren – it is great to see a question like this. It is rare for anyone to ever ask a simple question like, “Where does the electricity come from to fuel an electric vehicle?”

The reality is that even in states that we might perceive to be “green,” the majority of the electricity is still produced by fossil fuels, and/or hydroelectric sources that damage natural freshwater ecosystems… and that’s very true even in California. What that means is that EVs are primarily “fueled” by fossil fuels and rarely fueled by clean energy. This means that the carbon released into the atmosphere is simply displaced (at the power plant rather than in our neighborhood).

More specifically to your question, as less overall gasoline is required due to EVs exceeding more than half of automobile production at some time in the future, much less energy will be required to refine petroleum into gasoline. In other words, if a population doesn’t grow, then there really won’t be a need for building new electricity production.

But what does need to happen if we want EVs to be powered by clean energy, rather than coal and natural gas (which is mostly what happens today), is we need to build new infrastructure for clean energy production. That includes solar where it makes sense, and nuclear fusion (not fission), which has no radioactive byproducts.

And for consumers that don’t have long commutes and mostly drive around their local areas, a solar panel installation on the roof can usually provide enough energy to fuel an EV on most days.

That’s all for this week. Don’t forget to send us your thoughts on these and the other investment themes we track for you.

Will you be investing in gold… bitcoin… or the EV revolution? Is there an early-stage market megatrend we’re missing?

Send your thoughts to [email protected].



Chris Lowe
January 31, 2020
Delray Beach, Florida

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