On July 25th, I provided a warning that gold and silver prices were NOT too expensive despite the propaganda of the commercial investment industry to the contrary, specifically for three reasons I outlined in the above linked article. We have just witnessed gold’s price move higher by $98 an ounce and silver’s price move higher by $0.64 an ounce in about one week’s time.
With everyone mesmerized in the past week with the issue of whether or not the credit rating agencies would downgrade the US’s rating, I tweeted the following this past July 29th:
“think that a deal to raise debt ceiling will be announced before deadline. but in the end, whether it happens or not is really irrelevant.”
“for debt ceiling to be raised or not is like choosing b/w being on a sinking rubber raft or the sinking Titanic. both outcomes will be same”
“only timeline for crisis will change because no problems will have been solved whether debt ceiling is raised or not. that is the key point.”
Frankly, I really didn’t care whether the US credit rating was downgraded because in my mind, it should’ve been downgraded at least 5 years ago and I knew that any subsequent downgrade, if it happened, would not reflect the true state of the disaster that is the banker/US government kleptocracy. I knew that the fundamentals supporting gold and silver would not be changed by the outcome of this credit rating downgrade and that gold, regardless if the bankers and the CME colluded in the future to knock down prices by raising margins and forcing longs to liquidate, as they did with silver recently, would still recover strongly in the future no matter how far they were able to take prices down in their bogus-run futures markets in London and New York.
Commercial investment advisers consistently dole out some of the worst financial advice I have ever encountered. Why? I believe sometimes advisers at huge firms want to do what’s best for their clients but this often conflicts with their corporate directive, which is to feed the corporation’s bottom line. So even now, though there is a very high probability in my opinion, that the GLD and SLV ETF are fraudulent funds, commercial investment advisers continue to shuttle their clients that want exposure to gold and silver into these vehicles (read here for more on this).
Secondly, financial advisers can almost never contradict the top investment strategists of their company. For example, Robin Bew, chief economist at HSBC Bank, predicts gold will fall to $1390 by year-end and to $1000 by 2013. If the Chief Economist at your firm is predicting a substantial drop in gold prices, then as an adviser at this firm, you can’t very well advise your clients to buy mining stocks on the falling gold prediction of your Chief Economist, even if you believe they will go on a monumental run in the second half of this year.
One thing I truly believe, however, as you can see in the below graph (note: the below graph is from the end of last week), is that this current correction in gold and silver mining stocks have made them supremely cheap again and that the best-in-class mining stocks, when this correction ends, will offer some of the best returns of any asset class for the remainder of 2011 given the obvious and deliberate devaluation Central Bankers are inflicting upon the US dollar and the Euro.
Again, one has to remember that concentration does not equal risk though the commercial investment industry really wants all their clients to believe this rubbish concept. Secondly, corrections in gold and silver, though they are very frequently sold by the commercial investment industry as the “bursting of the precious metals bubble”, are just that — corrections, and additionally buying opportunities to accumulate more physical, when they happen. If one truly understands the fraudulent nature of today’s fractional reserve banking system, one would realize that concentrated strategies are the ONLY strategies that have led to wealth preservation, wealth growth and risk reduction in the past few years. Not owning a single ounce of physical gold and physical silver in this environment is absolute insanity (and remember if you own the GLD and the SLV, you DO NOT own a single ounce of physical gold or physical silver). Recall last week’s conversation below to know that politicians and bankers will lie to you much more frequently than they will ever tell you the truth.
Fox Business Reporter Peter Barnes: “Is there a risk that the United States could lose its AAA credit rating? Yes or no?”
US Treasury Secretary Timothy Geithner: “No risk of that.”
Barnes: “No risk?”
Geithner: “No risk.”
After all, former US Federal Vice Chairman and current Princeton University economics professor Alan Blinder, in perhaps what was one of the most misanthropic statements of all time, condescendingly stated, “The LAST DUTY of a Central Banker is to tell the public the truth.” (emphasis mine). At maalamalama, we have seen this disaster coming since 2006 and have literally been urging our clients for six years now to buy physical gold and physical silver. For those that have concentrated their investments in gold and silver the last 6 years, the rewards have been tremendous, even through the disaster of 2008. Still, it certainly is not too late to benefit from gold and silver investments right now though the Commercial Investment and Banking industry may be trying to convince you otherwise.
At maalamalama, we believe that this current correction in mining stocks will offer the last great buying opportunity of the year and that any future correction in gold and silver that may happen before the end of the summer (if it even happens) will also offer the last buying opportunity of the year. And whether QE3 happens or not, this is irrelevant to investing in gold and silver assets. It is our firm belief, QE3 or not, that gold and silver will provide far superior returns to any global stock market for the remainder of this year and in future years as well.
About the author: JS Kim is the Chief Investment Strategist of maalamalama, a fiercely independent investment research and consulting firm that tirelessly works to counter the propaganda of the commercial investment industry to provide the best and most profitable investment strategies to our clients year after year. Follow us on Twitter.
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