Author Archives: Financial Foghorn

Support Your Local Robot

“I skated to where the puck was going to be.”  Wayne Gretzky
May 23: Gold – $1200+.  Silver $16+.  Lousy.  Both rigged by the banks.

 

Tesla and Google are working on driverless vehicles driven by computers.  What will that do for taxi drivers or our 1.7 million truck drivers?  Or chauffeurs?

 

Robot ordering machines are popping up in casual restaurants.  Teenagers haven’t noticed, but the first steps in the job market may be missing.

 

      There’s a pattern here.  Where are all the elevator operator jobs?  Or gas station Imagepumper/window cleaner jobs?  Can you even reach a telephone operator today?  Telephone trees at corporations have almost eliminated the “receptionist.” There will be over 8000 retail store closings in 2017, caused by Amazon.  Amazon has hundreds of the little warehouse robots moving goods around in their distribution centers.  And don’t even start with robots in movies…they’ve all been villains.

 

Smithsonian magazine recently pointed out that our wide scale job losses in manufacturing were not all about “immigrants” taking our jobs.  (Most of those folks are out picking strawberries anyway.)  Manufacturing went overseas because it was cheaper labor there.  The Simpsons and other cartoon shows are “finished” in Asia because the cost of cartoonists went up too much in this country.  Domestic manufacturing bought robots instead of hiring welders or tool and die guys.

 

The new $15 an hour minimum wage laws will make almost every industry try to cut costs (i.e., employees) as well.  Warren Buffett days that driverless cars will “negatively impact” car insurance.  I.e., premiums will have to drop from fewer accidents, and underwriter persons will get automated away.  This process has already happened with home mortgages.  Rocket mortgage is auto-FICA.

 

Passive investing and Robo Advisors are bringing computerized elimination of brokers and fund managers.

 

Smithsonian notes the comparison with conditions now to the Luddites, a small but ornery bunch of black hooded characters in the first decade of the 19th century who punched out a bunch of framing machines in the English countryside.  After the destruction of over 800 weaving and cotton machines, Parliament swung into action and convicted and hung 24 of the Luddite leaders.  Luddite protesting ceased.  http://www.smithsonianmag.com/innovation/when-robots-take-jobs-remember-luddites-180961423/  Kind of an early version of Kent State.

 

So, is Luddism is an option for the population today?  Will people raid an Amazon center and destroy the little warehousing robots?  Will customers in the drive-through lane at McDonalds charge through window #1 and stomp the little voice recognition computer?

 

When the local TV news show goes to scrolling text and pretty pictures of the environment instead of “anchor” persons, will the pretty former journalism majors rise up and slash the tires of the station owner?  I don’t think so.

 

At the end of the 1933 movie, Dinner at Eight, Jean Harlow chats with Marie Dressler https://www.youtube.com/watch?v=EQNQqwFK-OM  Harlow says that a book said machines will replace everything.  Marie casts an admiring glance at Harlow’s slinky body and responds with, “That’s something you need never worry about.”  Well, a later movie called Outland, set in space, did have robot hooker units, and the Japanese are building some now.  Never say never.

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        Women probably won’t support the Luddite move against the slow train wreck that is employment, but someday they may wonder where the all the great potential husbands with the good jobs are.  The answer is they’ll be out there, but there will about 10,000 well paid guys for a million women.  And if a woman is ok with legalized prostitution, how are guys with no jobs going to pay them?

 

If the trend toward robots is unstoppable, and breaking the machines is not a realistic option, is there a way to protect ourselves from the onslaught of this computerization?  One way I can see is to bet on an increase in demand for robot parts.  The stuff that goes to create and operate robots and computers won’t change.  And what are those materials resting inside robotic machines and little voice recognition machines?  Dirt?  Mayonnaise?  Chipmunks?

 

Go look inside a computer or a robot.  Motherboards, wiring, even chip manufacturing equipment, all require little pieces of metal called silver to conduct electricity.  That’s why satellites are all full of silver wiring.  It doesn’t rust or rot.  Sears can’t make a house call to Telstar 6 up there, so it’s got to last.

 

Why is lasting important?  Because for computers, when you insert your credit card into the gas pump for your driverless car’s fuel, the dish on top of the gas station roof makes a call to a satellite, then to a bank, and retrieves info that approves your purchase to buy unleaded at the attendantless station.  Corporations want that process to continue because that’s where the credit card money comes from.  There aren’t any good, reliable, long lasting substitutes for silver, period.  Buffett was correct to buy silver in 1997, but got mugged by the later price rigging.

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        So, while there may be fewer employees hanging around the gas station, the restaurant, the cab stand, the truck stop, the insurance company or the elevator, the amount of silver needed to run this growing number of pesky little contrivances will only increase.  Oh, and by the way, scarce silver should become more a lot more valuable along the way.  Various reports say there is less silver in the world now than there is gold.  http://www.wealthdaily.com/articles/silver-is-now-rarer-than-gold/3150  It’s because we’ve used silver for lots of things for a long time, not just iPods, iPads, iPhones but also for defense and especially for photovoltaic cells and solar power.  (See the thousands of silver ounces chart above)  I would think silver recycling would be a good job industry along the way too.

 

        Everybody should be studying the Luddites and wondering how a growing population will support itself in a job losing world.  We can’t all go back to family farming.

 

The third generation will be lucky to have shirtsleeves.  They’ll be proud to have T-shirts…probably made in Bangladesh.

 

Silver at $17 an ounce is the cheapest investment on the planet, in history, and probably in our lifetime.  You can support your local robot by becoming a “Silver Luddite” and buying the companies producing the materials that go inside the robots and computers that will put your kids out of work.

 

I’d look at the big producing silver mining companies, starting with Hecla (HL), Coeur (CDE) or First Majestic (AG).  The royalty companies are also worth a long term glance because they are a silver play without as much of the actual mining risk.  Silver Wheaton (SLW) and Sandstorm (SAND) look interesting.

 

I don’t spend a lot of time looking at the books or the profits of producing silver miners these days.  Their stock prices are all managed, and the prices on the Comex or Crimex are cruelly manipulated downward daily.  See the evidence from GATA at www.gata.org.  Later (?), if, as and when the Chinese or Russians start setting PM prices, and silver and the mining stocks trade on a more straight forward “limited-supply and massive-demand” basis, life will require more research.  For now, the metal and the mining stocks are all stupid cheap.

 

Foghorn owns AG, SLW, and SAND, and isn’t going after HL or CDE.

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