Wednesday, May 26, 2010

Two Must-Watch Videos:

"Central Banks stand ready to lease gold in increasing quantities should the price rise"
 - Alan Greenspan, July 1998

Many of you may have already watched these. They are worth watching twice. The first one is Mike Maloney, who does a great job explaining "why gold/silver?" In this quick video, he discusses the Central Bank gold leasing operations and why it is leading into one of the biggest short squeezes ever. Here's some of his salient quotes

- GATA "has compiled a body of evidence that is just so overwhelming that any sane person that looks at it comes to the conclusion the world's Central Banks have been doing this process of leasing gold and selling it into the markets to suppress the price"

- "if [the Central Banks and ETFs like GLD] had to go out and buy the gold and silver in the open market to replace it, the price would go to the moon."  But even if they don't, just being publicly exposed as being short irreplaceable gold/silver will make the price explode.

- "they're getting caught in one fo the world's most gigantic short squeezes and one day we will see thse prices just absolutely explode"'s the video:

The CB and ETF leasing schemes have created the illusion that there's a lot more physical gold and silver in the market than really exists and these entities have created a short position in the metals that will ultimately be very difficult, if not impossible, to cover. The price of gold and silver do a moonshot and the prices of ETFs like GLD and SLV will plummet like Enron/Refco/Bear Stearns et al.

And here's a 12 minute interview with Marc Faber.  Just for the record, Faber for the last 5 years has been way too conservative in his gold price projection.  But he's getting warmer - Here's his defining quote:  "when I look at all the asset classes in the world and I look at the forthcoming disaster that I envision in the next few years, I am quite happy to be holding physical gold:"


  1. We're all workin' for Yankee $$$$$$$$$$$$

  2. Dave--

    I follow your stuff closely. It's great. Thanks!

    I'm just starting to look into large- to medium-sized gold mining companies, to protect my 87-year-old mother's money from all the disaster coming down the pike.

    Could you tell me what you think are the top 5 large to medium sized companies that will do well (price appreciation) over the next year-and-a-half to two years?

    Thanks very much.

    Jeff K.

  3. Thanks for the feedback Jeff.

    I like NGD (New Gold), GG (Goldcorp), HL (Hecla), SLW (Silver Wheaton), and more speculative but a great story EMX.V/ESMNF Eurasian Minerals.

    Please do your own due diligence. All of those companies have a lot of great information on their websites.

  4. Dave: THANK YOU VERY MUCH. I appreciate it, and will do my due diligence as well as I can. (I don't have a big background in fundamentals.)

    GG was at the top of my list. SLW and NGD were on it too. I have to look into Hecla and know nothing about Eurasian Minerals.

    I also plan to look into Eldorado, and maybe Randgold. (Though with Randgold, I'm worried about possible geopolitical problems that I know nothing about.)

    Thanks again,


  5. Dave-- One last question if I might. Of these 3 precious metals trusts, could you rank them in the order that you think is best to worst (relatively):


    I may put some of my mom's money into one of these as well, and will do more research into them.

    By the way, thanks for all of your warnings against GLD, SLV and GDX. If I hadn't read your stuff, I would've been tempted to take the "easy way out", and stuff a bunch of IRA money into one of these ticking time bombs. It's unbelievable how many "traps" there are out there. After doing a bunch of research, someone could finally find the ultimate safe haven of precious metals, and still end up losing a ton of money in one aspect of this area (these ETFs). Traps everywhere!



  6. If you don't plan on exchanging your shares for delivery of the gold in the trust, go with GTU and CEF. CEF is 50/50 gold silver and GTU is 100% gold. Actually I like CEF a bit better than GTU for indexing pm's because of the silver aspect.

    If you want to take delivery of a 400 oz. bar - buy PHYS.

  7. I like EGO but it's a bit expensive in terms mkt cap/gold in the ground. I've never really looked at GOLD so I can't comment on it. We trade in and out of EGO in our fund. Fidelity is the main large shareholder there and they like to move the stock around.

    Eurasian Minerals has the potential to be a 10-bagger. The management there is top drawer and they have some incredible deposits that they are developing in conjunction with large-cap partner. I bet NEM buys EMX w/in the next 2-3 years for a huge price.

  8. The impending move up in the price of Gold will surprise even the most ardent Gold Bull. The March 26th decline in conjunction with the Long Bond's rally is suggesting hair trigger panic building in the markets. It should begin to gain momentum in August/September as the FED begins the next round of multiple expansion in QE.

  9. Mike Maloney?! Like seriously Dave...

  10. J-Mac: I think the Fed floods the system w/liquidity before the mkt cracks. Looks like the banks are getting their way w/the Fin Reform Bill, so they can stop letting stocks fall. Clearly the Fed pressed on the accelerator last night.

    Totally agree that we may see a huge rally in gold that take the breath away from even a lot of goldbugs.

  11. Anonymous: what's wrong with mike maloney?

  12. Until you explain succinctly and cogently your reasons for finding Mike Maloney disagreeable, it is more relevant to say that I'm scraping the bottom of the barrel by giving your empty words air-time on this blog.

  13. With all of the chaos coming down the pike in the paper world I would only trust physical Gold/Silver in my possession.

    Joe M.

  14. More great stuff, thanks Dave, really appreciate your blog.
    Bought a few kilos physical silver monday for a long-term hold. Fingers crossed.

  15. Thanks for the feedback - appreciate it. If they somehow manage to smash the price, buy more. I've been told by an industry insider that they don't have the physical supply anymore to do what they did in July 2008.

    Right now in fact, the Mint has put silver eagle sales on allocation and they are being at a burn rate that exceeds U.S. silver mine supply.

    The price of silver is going higher.

  16. Dave: THANKS VERY MUCH for all your feedback. I appreciate it A LOT.

    Joe: I agree about physical gold in your possession. The money I'm trying to get into gold stocks is in an IRA, and I don't know of any safe way to get it into physical gold. All the money outside of the IRA I got into physical gold back when it was $400 and under.

    Dave: one last question (isn't always the last question?). If you had money "trapped" in an IRA, do you think it would be a better choice to short the market or go long into the best gold stocks? And (OK, 2 more questions), if the dollar is ever "devalued overnight" by 30-50%, what do you think would happen to the SPX? Would it jump in price overnight by 30-50%? Or drop in price by that amount? Or do nothing? (I'm just wondering what would happen if I'm short SPX and an overnight 30-50% devaluation happens. Guess I should do some research into the Argentina stock market when, I believe they've had events similar to this.)

    Many thanks,

    Jeff K

  17. P.S. With money in an IRA, could I invest in PHYS and take delivery of physical gold? If not, I'll definitely go the CEF/GTU route.

    Thanks again. There are so many pitfalls out there! And when you're a non-financial type, as I am, it can seem like one huge maze, wrapped in a hall of mirrors, surrounded by a false matrix. I appreciate your expertise.


    P.S. I got caught in the 2008 golg/gold stocks massacre. Thought I was nice and safe and then got run over by a Mack truck.

  18. Jeff, re: your IRA. You can take delivery of physical gold into your IRA, but you have transfer it to an indepedent custodian who will allow that. The two we use for our clients who invest in our fund are Entrust and Sterling Trust. You can google them for the website. Remember, with PHYS you need to own enough shares to converst into a 400 oz. bar. But with Entrust/Sterling, you can actually by physical coins gold/silver American eagles, etc, so you can invest directly in bullion w/out needing the $500k required to take delivery of the 400 ozs.

    My best guess on a dollar deval would be that the SPX would jump quite a bit on the theory that the deval would stimulate the crap out of exports and jump start the economy. BUT gold/silver will go up a lot more %-wise than the stock market.

    In terms of you IRA question, just move it to Sterling/Entrust and put it all in gold and silver. You can go wrong with that.

  19. Dave: We don't have enough in the IRA for PHYS. So I will definitely look into Entrust & Sterling. Is one of the two safer than the other in your opinion? There's so much fraud going around that I'm very wary.

    One last (I promise!) question for you: my older sister has a bunch of money in her company's 401K. I'm trying to protect her as well. From the limited choices she has (no precious metals option, no bear funds) about the best I can do is persuade her to go all cash in this upcoming bounce in the market, before it goes, I believe, a lot lower. Is there anything that someone can do with money in a 401K who has limited options? I don't know if se could roll it over into a self-directed IRA and then put it into physical gold in Entrust/Sterling, or something like that? She just seems trapped. Best option, put it into cash, then the dollar eventually goes down and she loses a lot of buying power, on money that she has spent many years trying to build up.

    Unfortunately, my efforts to help my family and friends keep me up at night, because I have some idea of what is coming down the pike.

    I just want to thank you so much for sharing your considerable expertise to help out people like me, my mom, sister, other family members and friends. I try to get the word out as much as I can to help as many people as I can. It just breaks my heart to see what is happening to good people who are trapped in this awful situation/awfully corrupt system. They work hard, do nothing wrong -- and then get crushed.

    Again, my deepest thanks for all your advice and for sharing all your expertise with all of us. IT IS MUCH APPRECIATED!

    All the best to you and yours

    Jeff K

    P.S. And no more questions, I promise!

  20. LOL. No problem - ask all the questions you want. More than happy to help. W/regard to Sterling or Entrust, I prefer Sterling - better customer service.

    Your sister is trapped in her 401k until she leaves that company. Her best hope is to load up on CEF, GTU and cash. Sounds like she might not agree with our view of the world. Most people do not and that's why gold is still really cheap.

    Regarding all these people who are honest, hard workers but who will get screwed when the shit hits the fan, all ya can do is lead a horse to experience is that most people simply refuse to believe anything really bad will ever happen. It's like discussing politics or religion. Unfortunately these people will be hit on the bakck of the head by a 2 by 4 they never saw coming. But the hoi polloi would rather watch reality tv than spend time at night educating themselves.

  21. Look at what Richard Russel said last week.

    "Sell Everything you have, you will not recogonize America by the end of the year."

    I just do not think you can protect any paper account now. At this point, all paper needs to be liquidated and placed into Gold/Silver or tangible items.

    If this means quitting your job to do so then so be it OR be prepared to lose it it all.

    Somebody recently quipped, the USD is the best horse at the glue factory.

    Joe M.