If you believe gold and silver are too “expensive” to buy at these prices, then this article is for you. Even with nearly 100 years of massive dollar devaluation by the US Federal Reserve, more than 700 years of fiat currencies with multiple instances of total fiat currency collapse in China, France, Germany, Zimbabwe et al, and nearly 6,000 years of gold as a stable currency, massive misunderstandings about the price of gold and silver still amazingly exist. For example, just because gold has risen from $250 to $1,600 a troy ounce and silver from $4 to more than $40 a troy ounce within the last decade, there are still millions of people waiting on the sidelines to buy their first oz. of physical gold and physical silver because of their belief that gold and silver are “expensive.”
In early 2006, when gold was trading at $580 and silver was trading at $11, I told anyone that would listen to me that in a few years they would look back at those prices and marvel in amazement at how cheap those prices were. This despite the fact that the miseducated financial media was touting those very prices as “very expensive” back then as well. As sure as I was back then of my prediction coming true, I am equally sure today that in a few years, people will look back on the price of gold at $1,600 and silver at $40 and marvel at how cheap these prices were as well. This doesn’t necessarily mean go out and chase gold at $1,620 right now because I do believe a pullback from this level is in order very soon. However, from the very first day I launched my Crisis Investment Opportunities newsletter on June 15, 2007 until this year in 2011, due to my strong conviction in the continuing upward trend in gold and silver, I have heavily concentrated my CIO newsletter portfolio in gold and silver assets. For this reason, my CIO newsletter has outperformed the major US, UK and Australian stock market indexes all by well over 200% during this time period.
To understand why the best-in-class gold and silver stocks are still highly undervalued even as of today, please read this recently scripted article titled, “Why it’s Still Buying Season for Gold and Silver Mining Stocks”. A lot of investors shy away from buying gold and silver mining stocks and from buying physical gold and physical silver because of the annual volatility experienced by these assets. However, in the more than four years that I have been publishing my investment newsletter, I have always considered the right precious metal investments to be a low-risk, high-reward proposition. To illustrate this point, were I taking excessive risk over the years in my investment newsletter, I should have experienced massive losses in 2008, a year when most major global stock markets lost about 40% across the board. Instead, I was still able to return a slightly positive return in my Crisis Investment Opportunities newsletter in 2008. This would not have been possible had I constructed my newsletter’s portfolio with high-risk, high-reward assets. Unfortunately, most investors very erroneously believe that high volatility equals high risk. This is not true and has never been true. In this article I wrote nearly five years ago titled, “Volatility in Your Portfolio Does NOT Equal Risk”, I explained why so many people misunderstand the role of volatility in their portfolio.
In this follow up article I wrote this month, titled, “The Surprising Truth About the Volatility of Gold & Silver Mining Stocks,” I explained how volatility can actually be used to mitigate risk if one understands that banker manipulation is the primary cause of much of the short-term volatility in gold and silver assets. The best way to invest in gold and silver is never to chase the price higher, but to buy heavily on the steep corrections that happen every year. Right now, unless the US defaults on its debt, gold will likely experience a period of consolidation and/or correction very soon. Even so, gold and silver are likely to experience some explosive upside during the second half of 2011. Don’t let the misinformed financial media and miseducated financial consultants that work at commercial investment firms lead you astray with their declarations about the “high” price of gold and silver now. Instead, I encourage all of you to investigate the facts I’ve presented in this article and to take active steps to protect your wealth by buying gold and silver assets before they truly do become “expensive”.
About the author: JS Kim is the Managing Director of maalamalama. maalamalama now offers monthly subscriptions to our premium investment newsletter, the Crisis Investment Opportunities newsletter, an investment newsletter that has returned well over a cumulative 200% (on all opened and closed positions) since its launch in June 2007 to present day. Follow us on Twitter here.
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