The confidential meeting three years ago…. In an eastern US city approximately three years ago, major bankers met for “discussions.” The purpose of the conference was not disclosed. However, there is an ugly rumor that one of the issues discussed was the necessity to keep the price of gold bullion down. The rumor was that it was about $1300. The point is that if gold is rising, it indicates problems in the financial system and the economy. For years we have seen the “put up jobs” of manipulation regularly occur. But of course they would never “collude” and try to manipulate the price of gold. It must just be another ugly rumor. Manipulation and bank collusion would be downright un-American; it brings tears to my eyes to even think that such things could occur.
Manipulation? We see in recent days that huge sales of gold, which are actually sales of “paper” on the futures exchange, have occurred in such enormous size that they caused the price of gold (carrying silver with it) to decline. The purpose and plot is to keep the price of gold down at any cost. Note well that one day last week, they were in reality ‘’paper” commodities contracts that totaled approximately $3,000,000,000 (US $3 Billion) in paper value of gold that was sold. It was done in over 20000 futures contracts-it was not the gold bullion!
In our opinion, the sell transactions were designed as a deception to create the image of weakness in gold engineered by specific Bankers. It was sold (dumped) for the purpose of keeping the gold price down and no other reason. Then it was repeated for another over $2,000,000,000 in paper contracts. More and more, the world is aware of the blatant manipulation and we are close to the time where the manipulation it will no longer be effective.
Cycles? On a cyclical basis, gold and silver are due for major moves up which do not have to occur on schedule. Often cycles are early or late in their occurrences but nonetheless are significant. 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 metals and mining stocks can be during bear markets and brutal corrections.
Brokerage industry. The large brokerages do not want to see nor can they tolerate a bull market in gold; yes, the same large American brokerage houses 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. The bear markets cause losses of profitability for the brokerage houses. Therefore brokerage houses do not acknowledge a bull market in gold. Brokerage houses suffer tremendous losses of profitability during bear markets and bull markets in gold and silver mining stocks suggest bear markets in industrial stocks and allow for very limited profits.
Central Banks have been huge 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 another major buyer. Russia is a large buyer as well.
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 their pathetic performance over the last thirty years. As brokerages downgrade precious metals, it is often 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?
We will say it again…..The best time to invest in mining stocks has often been when they are languishing near their multi-year price bottoms for many mining stocks. Yes, for the value oriented investor, the best time to invest in gold and silver mining stocks is during bear markets. Investors then have opportunities to pick up the “low hanging fruit ” at low prices
The U.S. Dollar strength…. The direction of the US Dollar is the most important influence to the price of gold…to say the least. 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; any move up dramatically increases the cost to debtors. Our analysis suggests that the US dollar’s direction is down.
Is Gold so bad? Since the year 2000, gold is up approximately 400%, the S&P 500 is up approximately 93%, enough said? Our point? There is a time and place for everything…our analysis suggests that it is almost gold’s turn.
Different levels mining stocks…. Different levels of mining stocks (exploration, developmental, producing) generally require different gold and silver prices to attract investor attention. For example, generally speaking, many but not all exploration legitimate junior small cap mining companies probably may need a $1400 plus (U.S. Dollars) gold price to generate strong investor interest in them.
Our analysis indicates that we are now in the best time in history to be invested in gold and silver stocks. Insist on value, be patient and you may be quite surprised with the results. Our key indicator remains the same-we must see a bear market in the industrial stock market to have a bull market in the gold market.