Though falling gold and silver prices equal big opportunity, most investors paradoxically make poor decisions in regard to falling gold and silver prices, opting not to buy physical gold and silver when their prices are on discount and opting to wait until prices soar before finally going with the herd and buying at sub-optimal prices. In mid-June of this year, I wrote an article stating that the gold and silver price rise was only getting underway. A little earlier that that, in our Member Services, we instructed our Members to purchase many gold and silver stocks. Even some of the PM stocks we just purchased this past June are still up, even after the large drop yesterday, by more than 25% and 49%, but unless the situation drastically changes in the next few weeks, we intend to hold through this temporary lull in prices, and to use this opportunity to add a few more gold and silver stocks to our portfolio at these now heavily discounted prices. So I don’t see this drop as a negative at all, but falling gold and silver prices equal big opportunity, especially since a few of the gold and silver stocks we have been waiting to purchase in our Member Services had now dropped 25% to 30% in price.
On 26 July 2016, after gold, silver, and PM (precious metal) stocks all pulled back in price, I wrote an article stating that the pullback was just temporary, and sure enough, the very day I released that article, gold and silver prices reversed again. And right now, we once again, are in the midst of another gold and silver asset price pullback. This isn’t the first time a significant pullback in prices has happened this year either. Back in May of this year, many gold and silver stocks dropped by more than 20% to 30% before resuming their climb higher. And just as the situation demands now, back then, falling gold and silver prices equaled big opportunity. Depending on what Janet Yellen states this Friday in Jackson Hole, gold and silver asset prices may have even a little bit further to fall before reversing.
However, no matter what US Central Banker Chairman Yellen states this Friday, her delusional, deceptive statements about the state of the US economy will not have a lasting effect on the continuing uptrend in gold and silver prices. In fact, I believe that this current gold and silver asset price downtrend, which likely will end sometime within the next few days to few weeks, will present the last solid opportunity for those seeking to buy the best gold and silver stocks at a discounted price.
Though there are still a few irrational people in the gold and silver community that cling to their delusional notion that gold and silver prices aren’t suppressed to support the fraudulent nature of fractional reserve banking fiat currencies, yesterday we once again received proof to the contrary, when in New York, someone dumped over a million ounces of paper gold onto the futures market in one minute. So, as I’ve claimed all year, the banker manufactured gold and silver price manipulation schemes have not ended, contrary to the belief of many, but there certainly is a lot of evidence that their efficacy has decreased as opposed to prior years.
Though we have been in operation for 9 years now, we have always witnessed the same wrong pattern manifest. in regards to how the masses respond to these types of knockdowns in gold and silver prices and opportunities. Interest in buying gold and silver stocks always goes through the roof among the masses when prices are soaring, and then falls way off when we are entrenched in a significant correction, as is the case right now.
Interest should be the highest among the masses in buying gold and silver stocks when the prices of many gold and silver stocks have retreated by 20% to 30% or more, as they have right now, and not at its most subdued, as is too often the case. The mantra has always been buy low, sell high, but too often, many wait to buy gold and silver stocks only after prices start rising again and after they have regained all of their price dips, and the significant price discounts have disappeared.
Of course, there are a select few among the masses that join our memberships during these significant price pullbacks instead of ramp ups, but we believe, in general, the reason interest typically is low every time gold and silver stocks pull back considerably in price is due to the confusion in understanding the difference between the concepts of price and value.
If you’ve been following the price behavior of gold and silver stocks this year, then you know that the price of this asset class has gone way up this year. And once prices rise, most believe that good value no longer exists. This is true in many instances, but this does not apply to the asset class of gold and silver stocks this year. This year, despite this significant price rise in the asset class of gold and silver stocks, this asset class still remains highly undervalued, even more so given this current correction, which means that significant price pullbacks, such as the one we are experiencing now, present a solid opportunity to purchase still undervalued assets at an even better price.
When assets rise a lot in price, this doesn’t automatically mean they are a poor buy. In fact, an asset can soar in price and still be a great buy. For example, at one point in time, Apple shares traded for only $13 a share but then rose to $26 a share. When the share price rose by 100%, many people wrongly concluded that buying this stock after a 100% price rise was unwise, as the likelihood it would go down in the long run was much higher than the likelihood that it would continue to rise, but obviously this was not the case. This was because people misunderstood higher price with decreased value, when a higher price only meant that the shares were moving from extremely undervalued to a state of lesser undervalued. This is the situation that exists with gold and silver stocks today, as the charts I will present below illustrate. In fact, when Apple shares were trading at $26 a share many years ago, you could have bought the shares at this price and still have reaped enormous profits from the stock, especially considering the multiple stock-splits the share has undergone over the years, including a massive 7 to 1 stock split in 2014. Thus, despite a 100% rise in stock price, Apple shares back then were still massively undervalued.
I am confident that this exact example applies to the significant rise in gold and silver mining share prices in 2016 thus far. Despite their significant rise in price and current price pullback, even right now, gold and silver share prices still remain massively undervalued as a group. I believe that this current correction may present the last solid opportunity this year to buy this asset class at a decent discount from recent highs. If you don’t understand how gold and silver share prices can still be massively undervalued, just read this article. Of course, this doesn’t mean that all gold and silver stocks will continue to rise, as only the best gold and silver stocks will do so, and many others that were just along for the ride during the first half of 2016 and were dragged higher by the “a rising tide lifts all boats” phenomenon, may continue fall in price over time moving forward. As it is near impossible to start buying gold and silver stocks on the exact day gold and silver stock prices reverse, this is the reason one needs to gauge risk-reward propositions moving forward after big discounts arise like the current opportunity in gold and silver stocks.
For those of you that have subscribed to this newsletter, or followed my other media appearances on Max Keiser, the SGT Report, ZeroHedge, etc., you are already aware that I’ve been as consistent this year about my message regarding the opportunity presented in 2016 by severely undervalued gold and silver stocks as I was in 2015 regarding my message that gold and silver prices would remain in a downtrend for that entire year. Obviously buying at high, but fairly valued prices, is not a good strategy whereas buying at high, but still undervalued prices, can still be a low-risk, high reward strategy. It’s just a matter of identifying which gold and silver stocks, even with the current significant dip, still offer great value, and which gold and silver stocks were perhaps overvalued as of late, so now, with the current significant price dip, are fairly valued. And this is what we seek to do in our Member services. These type of corrections are inevitable during significant price runs higher, and they will happen in the future as well. But stick with the right Of course “high” is a relative term, as many gold and silver stock prices are significantly higher than their prices at the start of 2016, but yet still significantly lower than their 2011 highs.
Just look at the chart below for junior silver stock, Bear Creek Mining. From this chart, it is easy to see why I believe this run in junior gold and silver stocks is just getting started. However, as I’ve always told my members, one has to be very careful when buying junior gold and silver stocks, because, in my opinion, of the hundreds or junior PM stocks from which to choose, well over 90% of them are not worth your money. This is why I spend over 400 hours of research and analysis each year producing the Platinum Member research reports in which I discuss only a few dozen Australian and Canadian junior gold and silver stocks that are among my favorite out of hundreds.
And though I believe we have a very special situation in 2016 whereby the risk of junior gold and silver stocks is not that different from their larger cap PM stocks (though in “normal” years, they are much riskier), when we consider the valuations of the larger cap gold and silver stocks (as represented by the XAU Philadelphia Gold & Silver Miners Index), versus the gold price and silver price, the continuing undervaluation of gold and silver stocks is self-evident.
I have presented two charts below, one of the XAU v. the USD spot gold price, and the other of the XAU v. the USD spot silver price, with the horizontal red line indicating the level of the XAU when gold was trading at only $250 an ounce during Q1 of 2001, and the level of the XAU when silver was trading at a mere $4 an oz in November of 2001.
If you have been thinking of investing in gold and silver stocks, but still unsure if this asset class is for you, you may test drive our services first and receive 2 sample issues of our flagship Crisis Investment Opportunities newsletter.
To learn more about the even greater potential of junior gold and silver stocks (smaller cap stocks), just read our Platinum Member fact sheet and check out the significantly positive yields of our junior gold and silver stocks in 2015, during a year in which the XAU index fell by more than 33%.