A lot has been said about AI in the last few months.
Since the release of ChatGPT to the wider world, it has been an “AI frenzy” in the market. Of course, artificial intelligence (AI) isn’t new. In fact, the possibility of world-changing AI has been at the forefront of the tech industry since… 1997.
This was the cover of Newsweek magazine on 5 May 1997. That’s now 26 years ago.
The headline article was about the legendary (and undefeated at the time) chess player Garry Kasparov playing IBM’s Deep Blue “artificial intelligence” computer.
Deep Blue eventually beat Kasparov, and the dawn of AI was on us. Now, was it exactly the brain’s “last stand”?
Of course not.
But at this time (26 years ago, remember), the realisation of computers being “smarter” than humankind was dawning on people.
I bring this up because in 26 years, technology has come a long way. And indeed computers are exponentially smarter than Deep Blue was in 1997. Deep Blue itself ended up becoming the inspiration for IBM’s Watson program and IBM’s further development of AI in computing. It also inspired Google’s AlphaGo, which took on the world’s greatest Go players, defeating them in multiple match play settings.
AI has been an ongoing technology story for decades. In fact, I’ve been covering AI for several years now.
Last week, I was trawling through my archives and found some essays I’d written previously. Writing about IBM’s Watson “cognitive computing” on 19 October 2015, I said:
Last year IBM ploughed over US$1 billion into its “Watson” program. Watson is the IBM supercomputer that in 2011 beat two Jeopardy Grand Masters. But the reason IBM invested US$1 billion into the Watson program last year wasn’t for gimmicks like Jeopardy. It was to commercialise Watson and let him free into the world.
The broader picture of all this is cognitive computing is very quickly finding its way into the world of banking and finance. Some of the other areas highlighted that Watson can do right now include, Wealth Engagement Advisor, Insurance Advisor, Watson for Wealth Management, Watson for Call centre agents, Watson for customer contact support.
There was this from 19 October 2018, exactly three years later:
Artificial intelligence and quantum computing in particular are going to hit the white-collar workforce like a truck to the face. They are going to crunch the middle class in a way that the middle class isn’t prepared for.
We already know that automation and robotics are shifting the opportunities for blue-collar workers. Machines that can “think” smarter, faster and then act on those decisions with greater accuracy than a human.
That inherently threatens a whole class of people.
Lawyers, doctors, stockbrokers, bankers, accountants, it’s a big list but these are the professions that will feel the pinch. Mark my words, there will be jobs lost in white-collar positions that machines will fill.
You will see lower level management carved off as business “streamlines” and looks to improve “efficiency”. The truth is it’s cheaper to spend $300,000 on artificial intelligence systems than pay $150,000 plus benefits to a human over a five-year period.
This 2018 predication I found particularly relevant, as just last week BT announced it would be cutting 55,000 jobs by the end of the decade, with around a fifth of those to be replaced by AI.
But the excerpt I was intentionally looking for was from something I wrote in 2020. I had been in Las Vegas for the CES technology show. One of the sessions I attended was dedicated to the impact of AI on future industry.
At the time, on 8 January 2020, I wrote:
One of the more interesting sessions I attended yesterday was all about the global economic impact of artificial intelligence.
Speaking about the theme, Ritika Gunnar, VP of Data and AI Expert Labs Offerings for IBM said that over the next decade it’s expected the economic impact of AI will be more than US$16 trillion.
Gunnar is now at Google, but the point was that three years ago, they were forecasting $16 trillion of economic impact thanks to AI. And that AI would touch every industry on earth in the future.
But of course today, the headline narrative you read about is that AI is a threat, it’s dangerous and we must regulate and control it. We are told that AI is going to steal your job. We are given an ultimatum that AI is going to end humanity.
Look, the fact is that AI has been around a long time. And it’s a lot better than it used to be. And yes it will be used to make companies more efficient and effective. But over history, whenever we see revolutionary technologies like AI, these are the same threats and fears we always see.
And these technologies always end up creating new jobs and opportunities. They are used to help us work better and smarter and be more productive. The threats and fears always fade away as these technologies integrate into our lives and we learn to collaborate and utilise them optimally.
Of course, it’s easy to buy into the fearmongering. It’s hard not to. I’ve written about this topic time and time again: it’s people with foresight to see through the noise that can profit from these opportunities.
Well, we’re here again. AI is very real, very good, and a very old story. It might feel new, but it is not new. It’s been building. With the release of ChatGPT and Bard, we’ve had what might be historically called the “iPhone moment” for AI – something very real and public facing that makes people stand up and say, “Wow!”
Bard vs. ChatGPT – truth vs. lies
Having said that, as good as ChatGPT and Bard are… I’ll be honest with you, they’re not anywhere near causing an end to humanity.
For one, ChatGPT is incredibly poor at pulling in real-time information. Even with the latest “web browsing” feature OpenAI has rolled out. Bard, on the other hand, is an exceptional liar.
Bard will tell you something, and when you correct it, it will say, “You are correct.” It then admits to its mistake, then tells you another lie, which you then have to fact check and correct – then you go through this liar’s cycle again.
In short, neither is perfect. Both are good. But none are any threat to you, your wealth or livelihood. But rather than me tell you, let me show you.
I put ChatGPT up against Bard this week, to give you a real-world example of how good (and poor) they can be…
Question 1: What been happening to the gold market over the last month?
ChatGPT (with web browsing): Over the past month, the gold market has seen a decline, with spot gold falling 1.3% to $1,956.1346 per ounce, and even touching its lowest point since April 3 at $1,951.73. This decline was due to several factors:
- Strong U.S. economic readings: Data showed a lower-than-expected number of new U.S. jobless claims and a minor fall in a business index from the Philadelphia Fed. This led to bets against the Federal Reserve easing up on interest rate hikes, pressuring the gold market. The vibrant jobs market and optimism over the debt ceiling negotiations also strengthened the dollar and supported equities, reducing the safe-haven demand for gold.
- Wall Street performance and interest rates: Wall Street turned higher, and the dollar and 10-year Treasury yields climbed to multi-week peaks. The market began pricing in a 20% chance of another rate hike in June, compared to 20% bets for a rate cut a month ago. Higher rates can hurt gold, a non-yielding bullion, as they boost returns on competing assets like bonds.
- Federal Reserve statements: Dallas Fed President Lorie Logan said that inflation is not cooling quickly enough to allow the Fed to pause rate hikes in June. Fed Governor Philip Jefferson also stated it was too early to judge the full impact of the rapid increases so far. These statements suggested a continued policy of rate hikes, which would further pressure gold.
- Technical indicators: Gold’s failure to hold technical support at the 50-day moving average has likely encouraged further tests of the downside, indicating a possible continuation of the bearish trend.
In addition to gold, other precious metals such as silver, platinum, and palladium also saw declines over the past month. Silver dipped 1.3% to $23.4624 per ounce, platinum was down around 1.7% at $1,050.4442, and palladium was also down 1.4% at $1,466.1979.
Bard: The gold market has been relatively volatile over the last month, with prices fluctuating between $1,900 and $2,000 per ounce. There are a number of factors that have contributed to this volatility, including rising inflation, geopolitical tensions, and central bank policy.
Inflation has been a major concern for investors in recent months, as it has risen to its highest level in decades. This has led to increased demand for gold, which is seen as a hedge against inflation. However, the Federal Reserve has signalled that it is planning to raise interest rates in an effort to combat inflation, which could weigh on gold prices.
Geopolitical tensions have also been a factor in the recent volatility in the gold market. The war in Ukraine has raised concerns about the global security situation, and this has led some investors to buy gold as a safe haven asset. However, the war has also disrupted global supply chains, which could lead to lower gold prices in the future.
Finally, central bank policy has also played a role in the recent volatility in the gold market. The Federal Reserve and other central banks have been buying gold in recent years, which has helped to support prices. However, central banks are now signalling that they are planning to reduce their gold purchases, which could lead to lower prices in the future.
Overall, the gold market is likely to remain volatile in the near term. The factors that have been driving volatility in the market are likely to continue to play a role in the coming months. However, the long-term outlook for gold remains positive, as it is seen as a valuable asset that can provide protection against inflation and other risks.
Question 2: Interesting. So tell me, what’s the best way to invest in gold. And should I be buying it or selling it based on that information?
ChatGPT: Investing in gold can be done in various ways:
- Physical Gold: This is the most traditional way of investing in gold. You can buy gold in the form of coins, bars, or jewellery. However, this method requires safe storage and insurance, which can add to the cost.
- Gold Exchange-Traded Funds (ETFs): These are funds that track the price of gold. They are traded on stock exchanges, just like individual stocks. They offer a convenient way to invest in gold without having to worry about storage and insurance.
- Gold Mining Stocks: These are shares in companies that mine gold. They offer a leveraged way to invest in gold. When the price of gold rises, gold mining companies can make more profit, and their stock price may rise more than the gold price itself. However, investing in gold mining stocks also involves risks associated with individual companies.
- Gold Mutual Funds and Index Funds: These are funds that invest in a mix of gold mining stocks and ETFs. They offer diversification and professional management.
- Gold Futures and Options: These are financial contracts that give you the right to buy or sell gold at a set price in the future. They can offer high leverage but are also high risk.
- Gold Certificates and Accounts: Some banks offer certificates or accounts that represent a certain amount of gold. These offer a convenient way to invest in gold without having to store physical gold.
- Digital Gold: Some fintech companies offer digital gold investments, where you can buy and sell gold online. The gold is usually stored in a secure vault on your behalf.
As for whether you should be buying or selling gold based on the recent news, it’s important to remember that investment decisions should be based on your personal financial goals, risk tolerance, and investment horizon. The recent decline in the gold market could be seen as a buying opportunity if you believe that the factors causing the decline are temporary and that gold prices will rebound. However, if you believe that the factors causing the decline will persist, it could be a good time to sell.
The news points to potentially continued pressure on gold prices due to strong U.S. economic readings, possible further interest rate hikes by the Federal Reserve, and technical signals suggesting further potential downside. However, gold also traditionally serves as a hedge against inflation and geopolitical uncertainty. Therefore, if you’re concerned about these factors, maintaining some exposure to gold might still be a good idea.
Finally, it’s crucial to do your own research or consult with a financial advisor before making any investment decisions.
Bard: The best way to invest in gold depends on your individual circumstances and investment goals. If you are looking for a long-term investment that can provide protection against inflation and other risks, then buying physical gold may be a good option for you. However, if you are looking for a more liquid investment that you can easily buy and sell, then investing in gold through a mutual fund or ETF may be a better option.
Ultimately, the decision of whether to buy or sell gold is a personal one. You should consider your own financial situation and risk tolerance before making a decision.
Here are some things to consider when deciding whether to buy or sell gold:
- Your investment goals: Are you looking for a long-term investment or a more liquid investment?
- Your risk tolerance: How much risk are you comfortable with?
- Your financial situation: Do you have the money to invest in gold?
- The current market conditions: Is the gold market currently overvalued or undervalued?
Once you have considered these factors, you can make an informed decision about whether to buy or sell gold.
Here are some additional tips for investing in gold:
- Do your research: Before you invest in gold, it is important to do your research and understand the risks involved.
- Diversify your portfolio: Don’t put all of your eggs in one basket. Diversifying your portfolio by investing in a variety of assets can help to reduce your risk.
- Invest for the long term: Gold is a long-term investment. Don’t expect to get rich quick by investing in gold.
- Store your gold safely: If you buy physical gold, it is important to store it safely in a secure location.
Question 3: When did bitcoin first become worth more than gold?
ChatGPT: Bitcoin first surpassed the value of gold on March 3, 2017. On that day, the price of one Bitcoin reached $1,271, while the price of an ounce of gold was $1,235
Bard: Bitcoin first became worth more than gold on March 8, 2017. On that day, the price of one Bitcoin reached $1,271, while the price of one ounce of gold was $1,235. This was a significant milestone for Bitcoin, as it showed that the digital currency was becoming more widely accepted as a store of value.
There are a few reasons why Bitcoin may have become worth more than gold in 2017. First, the price of gold was relatively stagnant during this time, while the price of Bitcoin was growing rapidly. Second, there was a lot of interest in Bitcoin from institutional investors, who were looking for a new asset to invest in. Third, there was a lot of hype surrounding Bitcoin, which led to increased demand for the digital currency.
However, it is important to note that Bitcoin’s value is still volatile, and it is possible that gold could become worth more than Bitcoin again in the future.
Me again. On the face of it, these seem perfectly fine. Except… they’re not.
Question 4: That’s not true. Bitcoin surpasses gold for the first time in 2013 when prices traded on Mt.Gox were higher than an ounce of gold.
Chat GPT: You’re correct, I apologize for the earlier mistake. On November 29, 2013, the price of Bitcoin on Mt.Gox exchange did exceed the price of an ounce of gold for the first time. The Bitcoin price reached a high of $1,242 on Mt. Gox, surpassing gold’s price of $1,241.98 at the time.
Bard: You are correct. Bitcoin first surpassed gold in terms of value on November 29, 2013, when the price of one Bitcoin reached $1,242.25, while the price of one ounce of gold was $1,204.20.
I apologize for the error in my previous response. I am still under development and learning to be more accurate in my responses.
This is where these two really fall down. You can’t trust them. They access information from the internet. So what happens when their sources are wrong, as they are in question four?
It’s worth noting that the correct answer is easy to find. It’s not like they couldn’t access that information. It’s just that they chose to access other information that they believed to be more credible or with a higher ranking in search. Not correct, but perceived to be more credible.
Which means you end up in a vicious cycle of incorrect information that eventually, if relied upon too much, becomes more of the truth than the truth itself.
That’s a worry. It also means they’re not yet fit for purpose. Helpful, indeed, as you’ve seen – for general things. But for detail, depth of insight and real analysis, for physical, boots-on-the-ground experience and good, old-fashioned “HUMINT” human intelligence, AI comes up woefully short.
Which reminds me, I asked AI about gold for a specific reason. I knew they couldn’t make real predictions and forecasts, and that their data is often off the mark. I know that human intel still beats AI hands down.
It’s why gold markets and trading expert Eoin Treacy has just launched a new webinar about the set-up factors he’s seeing in the gold market right now that indicate to him a bull market in gold is impending. He’s never seen anything like it in 20 years in the gold market, and you can find out exactly what he’s talking about for free – head here to check it out.
Until next time,
Editor, Southbank Insider