Your opinion  The private investor’s judgement is often more accurate as or usually better than the so called “experts opinion.” Make sure that any advice makes sense to you.

Cycles? On a cyclical basis, gold and silver are due soon for major moves up which do not have to occur exactly on schedule. Often cycles are early or late in their occurrences but nonetheless are significant. They fool the majority. But note well that over the last three years during a period of a severe bear market in gold and silver mining stocks we have recommended and bought gold mining stocks that have rocketed up 900% (Richmont); up 1400% (Claude Resources was taken over by Silver Standard); and Niogold up 400% (was taken over by Osisko). Many others have had large moves up. Bottom line?  The  best and most opportune time to invest in precious metals and mining stocks is during bear markets and brutal corrections.    

 

Manipulation?  One can see in recent days and weeks that sales of gold, which are actually “paper” on the futures exchange have occurred in such enormous size that they caused the price of gold (carrying silver with it) to decline precipitously. Note well that they were actually paper contracts that were sold and in size represented more than a full year of true annual world gold production. No country could buy or sell that amount of gold bullion in the real world. It is a deception to create the image of weakness in gold encouraged by specific Central Bankers.

 

Brokerage industry  The large brokerage houses cannot tolerate a bull market in gold; yes the same large “expert” brokerage houses and banks that needed bailouts just to survive. Why? Because a bull market in gold and silver generally occurs during a bear market in the industrial stock market such as the Dow Industrials and S&P 500. Therefore brokerage houses never acknowledge a bull market in  gold. Brokerage houses have suffered tremendous losses of profitability during bear markets and bull markets in gold and silver mining stocks offer only limited profits.

 

Central Banks are enormous buyers of gold over the last several years. China has recently purchased nearly half the world’s total production which is approximately 3000 tonnes per year. India continues to be the other major buyer. Russia has been a large buyer recently.

 

Brokerage Advice on Gold & Silver We have said many times that the major U.S brokerage houses have proven themselves incapable of recommending gold and silver investments in a timely manner. Look at brokerage’s pathetic performance over the last thirty years. As brokerages downgrade precious metals, it is generally an ideal time to buy. Historically, if brokerages finally do (begrudgingly!) recommend gold and silver mining stocks, over half  of their price upmove will have already occurred. They never fail do they?

 

The U.S. Dollar strength Recognize that the prices of gold and silver have declined sharply as the dollar has risen. American products are at a distinct cost disadvantage due to the dollar’s strength. Moreover, so much debt is tied to the dollar, its move up has dramatically increases the cost to debtors.

 

Is Gold so bad? Since the year 2000, gold is up approximately 400%, the S&P 500 is up approximately 90%, enough said? Our point, there is a time and place for everything.

 

The only time when we invest in mining stocks has been while they are languishing at or near their multi-year bottoms. Yes, for the value oriented investor, the best time to invest in gold and silver mining stocks is during bear markets.

 

Different levels We will do another article on this shortly. Different levels of mining stocks generally require different gold and silver prices to engender investor attention. For example, generally speaking, exploration junior small cap mining companies probably will need a $1400 plus (U.S. Dollars) gold price to create strong investor interest in them.  It should not be far off.