It makes no sense that shortages of physical have developed while the prices of gold and silver have been declining the past few months. But the aggressive price take-down that occurs in the paper markets is an effort by the banks to discourage buyers from investing in physical gold and silver in an effort to help alleviate the growing shortage of physical metal in NYC and London.
This bullion bank fire drill has occurred intermittently over the 20 years of my involvement in the sector. And yet, gold has been the best performing asset from 2001 to present. Silver I believe has been the 3rd or 4th best performing asset.
The fundamental factors that drive gold and silver keep getting stronger by the day. I don’t know how much lower the sector will go from here – part of that will depend on whether or not a stock market accident occurs, something which I believe has a high probability. But at some point the Fed is going to have to unleash another massive round of money printing to finance the coming flood of Treasury issuance or risk losing control of the long end of the yield curve, which in turn would devastate the financial markets.
Meanwhile the mining stocks are once again historically cheap relative to gold and silver and especially relative to every other financialized asset class.
Bill Powers of MiningStockEducation.com invited me back on to his show to discuss the precious metals and some of the mining stocks I’m buying now:
The next big move in financial assets will come from the mining stocks. Mining stocks offer potential wealth enhancement through exposure to the “optionality” upside of price gold and silver prices. If you would like some ideas for investing in mining stocks, take a look at my Mining Stock Journal.