Though very few people do it, thinking for yourself is always a positive practice in which to engage. Last month, we received a number of emails from our clients asking us why we were still immediately bearish on mining stocks because there seemed to be a consensus on gold/silver mining sites that the gold/silver mining stocks would take off like a bat out of hell as soon as September rolled around. Well, September historically tends to be a good performance month for gold and silver but history does not always repeat itself, and that alone is not a good reason to be bullish on the mining stocks. As it is, the gold/silver mining stocks have now descended another 6% to 10% since we received some questions regarding our still immediately bearish stance towards gold/silver mining stocks.
The truth is, it doesn’t matter to us what the “experts” are saying or if a “consensus” exists regarding a certain investment/financial matter. If the data we review doesn’t support the consensus, we’re never afraid to go against the consensus, and neither should you. For the last decade, the consensus in the mainstream media regarding almost everything in the financial markets has been wrong.
“Consensus” led to the mainstream media predicting higher US housing prices right up until the moment the US housing market crashed in 2007. “Consensus” led to the mainstream media predicting higher US stock market prices right up until the moment the US stock market crashed in 2008. “Consensus” led to the mainstream media falsely parading economic professors in late 2008 stating that no one could have predicted the stock market crash of 2008 because there were no warning signs in the market before the crash. The only truth in that statement was that there were no signs being discussed in the mainstream media of an impending crash, but outside of the mainstream media, a handful of people, including myself, were discussing the numerous signs of structural weakness in the stock markets that eventually succumbed to market forces and created the stock market plunges worldwide. In fact, on 23 April, 2008, I wrote a blog predicting doom for the US stock markets called “Will US Stock Markets Crash Now or Later?” that attracted the wrath of many people influenced by mainstream media that called me a fool for my position. What happened in real life? Just 18 trading days after I wrote that article, the US stock market started crashing and the crash did not let up until the S&P500 eventually lost about half of its value.
So now that the mainstream media has seized this short-term decline in gold and silver assets to spread as much negative sentiment towards gold and silver as possible, am I on board with their consensus doom and gloom narrative towards gold and silver? Most definitely not. Long-term, I am still extremely bullish towards physical gold and silver prices and very bullish towards gold/silver mining share prices as well. September may still end up being a positive month for gold/silver prices but we will not buy gold/silver mining stocks until we see greater evidence of an impending reversal for gold/silver mining stocks, regardless of the consensus.