The gold/silver story is starting to seep into the masses. It will happen slowly, but if just 5% of the masses start to buy real gold and silver and eschew the fraudulent ETFs, there will be a serious price explosion. Imagine what will happen if 15-20% of the public start buying...it will be interesting to watch the gold/silver ratio, because as both metals get more expensive, there will be a serious display of the economic law of "income and substitution effect," and we'll see the "silver is poor man's gold" axiom on display in a major way. - Dave in DenverBill Murphy was the feature interview on RT's "Capital Account." The topic was manipulation in the precious metals market and the coming silver market squeeze. This is a must-watch interview: LINK
For all of us who have researched, studied, traded and invested in the precious metals market for the duration of the bull market, there is no question that JP Morgan has illegally manipulated the gold and silver market, likely on behalf of the Federal Reserve, in order to support the dollar. In the process, JP Morgan has reaped billions in ill-gotten, highly illegal gains.
In another era (see Drexel Burnham Lambert circa 1980's), JP Morgan would have been shut down and the upper management prosecuted and sent to jail. But it's the "new" America and it's okay for the insider elitists to loot and pillage the system with the full complicity of the Government.
But the market does not discriminate against income or wealth levels. Sooner or later the natural laws of the market will substitute in for the artificial manipulation and control being implemented. It will be ugly for those who are short gold and silver. China and Russia are aggressively accumulating the physical gold and silver that is being dumped on the market by western hemisphere Central Banks and bullion banks. I suggest you do the same...
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How much does $1000 of gold cost? $1000
ReplyDeleteHow much does $1000 of silver cost? $1000
How is silver the poor man's gold?
Don't argue that there are no small value gold coins, we're talking investment level quantities. If all you have to spend is $200 you should be buying rice and beans.
I know what you are saying, but the average joe out there would rather get 50 ozs of silver for the same cost as 1 oz. of gold. It's a time-tested phenomenon.
DeleteThere's also fungability issues. When we go back to a precious metals standard, it's easier to use silver as "walk around" money.
DeleteHi Dave,
DeleteI found your blog through a comment you made a few months ago concerning EMXX on Seeking Alpha. Stock has been on a nice uptrend of late and put out an unexpected PR today, which simply adds to the list of properties with "blue sky" potential. I think the option value on the company is tremendous and something market participants overlook when assessing value (especially considering MGMT). Just curious if you still follow it all and your general thoughts.
Regards,
BS
The short answer: EMXX is the largest holding in the fund I co-manage. We added quite a bit to our position when it was in the $1.80 range. If we didn't own so much, I'd be buying heavily right now. EMXX is extraordinarily cheap relative to the assets it owns.
DeleteI'm pretty sure we'll see something come up an extension of the mine life from NEM on the property that the old Bullion Monarch has the royalty on (about $6.5mm in income right now). The EMXX CEO did his phd dissertation on the Carlin Trend and spent 18 years at NEM. I know they thought BULM was very undervalued relative to potential resource expansion...
Thanks for that. I was a BULM SH who stumbled upon EMXX when they made their first offer a few years ago.
DeleteI'm jealous of the $1.80 accumulation, I pretty much went all in around $2.10 or so with the thought that the valuation was just too attractive, even with the decent support levels ~$1.70 or so of late. Too afraid of the Haiti bomb being dropped....The valuation for me was simple as, current cap less cash & securities and ask yourself if that is a decent option price on the projects in place given the economics of the deals. The NEM deal in Haiti whereby it's basically a capital budgeting project with no investment outlay going forward (makes for a low payback hurdle) is the ultimate risk / return tradeoff...
Also, and you're probably aware, but the principals of the BULM sub Dourave are actually pretty legit. NEM tried to strike a deal with them years ago for a regional generative exploration program in Brazil. Their website is now offline unfortunately. Notes in the prospectus mention the potential for the launch of a South American business unit. My money is on those guys being a part, if not heading it and Brazil being the epicenter. They knew about the main property Colussus Minerals is managing before they acquired it but thought local regulatory risk was too severe, obviously wrong but showed some sense.
Didn't know that last part about BULM. I have a good relationship with EMX management. I bought BULM in the fund back when it was around .85, got lucky and it was mentioned in some newsletter, it jumped up to like 1.85 - I sold it all. EMX likes the potential for the NEM minelife extension + BULM has several unexplored properties in areas where EMX thinks there could be some decent mineralization.
Delete"If all you have to spend is $200 you should be buying rice and beans."
DeleteI disagree. A couple months back, Iran came out stating that it wanted gold from India in return for Iranian oil: (http://www.eutimes.net/2012/01/india-to-buy-iran-oil-in-gold-not-dollars/) Now, if this actually taking place (and I believe it is), then what is the exchange rate for these oil and gold transactions???
Well, according to Another (http://www.usagold.com/goldtrail/archives/another1.html), back in 1998, the price of gold should be around 55,000/oz. (He somehow knew the exchange rate for the gold and oil deals!!!) So lets fast forward a bit and assume that the price should now be around 75,000/oz. Today a $200 investment in physical gold will buy you about 1/10th of an ounce of gold. If an individual buys 1/10th of an oz of gold for the next 10 months, he'll/she'll have an ounce.
And once that ounce is revalued upwards to 75,000/oz, he/she will have enough for a down payment on a farm!
"There's also fungability issues. When we go back to a precious metals standard, it's easier to use silver as "walk around" money."
I disagree here as well. I currently own 0.05 gram, 0.1 gram, 0.25 gram and 0.5 gram gold bars. They are sealed in tamper proof packaging. In the future, gold bars will be made in smaller and smaller denominations to accomodate those with lower income and smaller purchases. If the bars become "too" small, then they will be alloyed with another metal.
Here's another way to look at it: Look at our current currency system. We have $100 American bills, $50 American bills, $20 American bills....and so on and so forth. If all we have in our wallet is a $100 American bill, and we need some $5 dollar bills, we just go to the bank and exchange the $100 bill for what we need. There's no need to trade our larger American denominated bills for some smaller Canadian dollar bills.
When we need smaller bills, we just trade the larger ones in for lower denominated ones of the same currency!
-Sicilian Gold
Why do folks spend so much time worrying about eating gold or silver when dollars and 401-K statements can be cooked up into many a fine meal? /sarc
ReplyDeleteThe difference between silver and gold is that silver has been kept down to such a low low price for so long that when it finally breaks free from the gross manipulation it will shoot up to a much bigger return on the investment then gold.
ReplyDeleteWord is that mining for silver worldwide is seeing problems with bringing up the quality part of the ore at this time and in the future.
Considering the fact that there is 20% less above ground silver then gold right now , compounded with the problems of ore to be mined , it only stands to reason that there lies a very bright future for silver holders.
But central banks are buying gold. They are not buying silver.
ReplyDeleteCB's couldn't accumulate a meaningful amount silver. There's not enough dollar value of silver to be had...
Delete"But central banks are buying gold."
DeleteA mindful individual would ask themselves, "Why are the central banks only accumulating gold and not silver??"
WELL HERES WHY: Gold and oil can never flow in the same direction!
The Inside Story on the Gold-for-Oil Deal that could Rock the World's Financial Centers
http://www.usagold.com/goldtrail/archives/another1.html
-Sicilian Gold
dave, appreciate your commentary. I love silver.
ReplyDeleteDave, what are your thoughts on the new Rhodium bars that are being sold? Less than 1 million ounces are mined per year globally.
ReplyDeletehttps://online.kitco.com/products/31032/1_oz_Rhodium_Baird_Co_Bar.html
Rhodium is not a monetary metal. It would be a commodity play. I don't know much about the PGM's.
DeleteA Plea… A Prayer for Free Markets Now
ReplyDeleteThere is a Keynesian justification for moving away from free markets for sovereign debt for temporary conditions so long as corrective action is promised and taken. If not, the dislocation becomes debilitating and eventually remove an ability to function. We are on the way now with nearly permanent zero rates in the US and Europe amid deteriorating business conditions and lockjaw politics.
The purpose of free markets is price discovery, a match of risk and return. Once we warp that relationship we can not manage the way back. Yet we in these financial centers are sinking deeper into a pit of our own making without an exit strategy or timing. The outcomes will be a horror and not far away.
http://www.deanlebaron.com/video-cast/a-plea-a-prayer-for-free-markets-now/
Quote, "...but if just 5% of the masses start to buy real gold and silver and eschew the fraudulent ETFs, there will be a serious price explosion...."
ReplyDeleteAgreed, but I've just watched a TV documentary here in the UK which presented some shocking statistics. Ranging from the poor to the middle classes things are getting so bad that they are selling vast quantities of their gold to dealers just so they can eat. One provincial melt shop was quoted as melting a record 20 tons of scrap gold taken from their pawnbroker clients in one city in only one week.
However, I think the outcome you predict will be the same. When Joe sixpack has no gold left an important source will dry up and further price support will result.