Gold & Silver - Bull Market

[ianvestor]

I think we could easily see $1050 pretty soon.

That was quick ($1053 now). Got scared and sold all mine at $1033, doh Now I'm not sure when to get back in again.

 

[MichaelW]

Shame its going nowhere in AUD. All just a hedge against the USD which doesn't help us strong commodity currencies.

Still, not dissappointed I still have my holdings.

This bull will see $2,000USD before its done.

Cheers,
Michael

 

[hobo-jo]

Agreed Michael, at least US$2000 IMO, what that means for AUD gold I'm not sure, but gold stocks seem to be tracking the US gold price sentiment anyway. I think it could be significantly more depending on what actions the US government takes.

http://www.sprott.com/Docs/MarketsataGlance/09_09_MAAG.pdf

So how will this US debt crisis ultimately resolve itself? Let’s consider the options. It would appear from our analysis that the spending ‘promises’ are the crux of the problem now facing the US Government. If there isn’t enough new capital in the current environment to fund new Treasury bill issues (as we argued in “The Solution... is the Problem”), then there certainly isn’t enough capital to pay for the US’s unfunded future obligations. The choices, therefore, are bleak:

1. Default on Medicare promises. (Unlikely given the current debate in Washington to expand medical coverage.)
2. Default on Social Security promises. (Unlikely given the increasing average age of the voting public.)
3. Put forward a credible plan to balance the budget. (Unlikely given the most recent budget projections.)
4. Default on outstanding debt. (Unthinkable)

None of these options are feasible for the US Government. So they realistically only have one option left – to print their way out of their debt crisis.

We keep coming back to the numbers for the US debt, and they don’t add up. Even Alan Greenspan, former Chairman of the Federal Reserve, believes that the rising budget deficits in the United States are “unsustainable”. Because the US Government is printing dollars to fund their liabilities, it is highly unlikely that we will ever see a failed bond auction similar to that of Poland. The far more likely outcome, therefore, will be a US dollar crisis. It is for this reason that we have positioned our hedge funds and mutual funds so heavily in precious metals. At the end of the day, when the world finally realizes what the US has done to the world reserve currency, international investors will shift into an asset that no government can print. In our opinion the US dollar’s status as a ‘port’ in the financial storm has officially come to an end.

Alternative to the above 4 options we may also see a new US currency introduced to replace the dollar and then the dollar devalued against the new currency.

You're crazy if you think the removal/destruction of the US dollar as world reserve currency won't create ripples through other paper currencies...there will be a mad rush for gold towards the end and that's when I'll be selling (the large gold stock portfolio I now hold).


Can Gold and Silver Equities Expect +5,000% Returns Again?

With what has happened in the world of late and what will be unfolding in the next 5 years or so those few investors who fully understand the impact the current economic situation is going to have on future inflation, the USD, interest rates, the stock market, physical gold and silver and gold and silver stocks and warrants in particular are going to be in the unique position of being the benefactors of currently unimaginable returns and wealth. All they need do, as I like to say, is "Just prepare and prosper!"

Back in the mid- to late 1970's, as gold went up from its 1972 low of $60 to $850 in 1980 (and silver to $50), gold and silver stocks realized absolutely amazing gains:

* Lion Mines - 1975 price: $0.07 / 1980 price: $380 i.e. an increase of 542,757%!!!
* Azure Resources - 1975 price: $.05 / 1980 price: $109 i.e. an increase of 217,900%!!
* Wharf Resources - 1975 price: $.40 / 1980 price: $560 i.e. an increase of 139,000%!!
* Mineral Resources - 1975 price: $.60 / 1980 price: $415 i.e. an increase of 69,067%!!
* Steep Rock - 1975 price: $.93 / 1980 price: $440 i.e. an increase of 47,212%!!
* Bankeno - 1975 price: $1.25 / 1980 price: $430 i.e. an increase of 34,300%!!

The percentage returns above, averaging 70,627%, seem totally unbelievable but they are verifiable. They were achieved by investing in the right stocks at the right time. Imagine, and the above companies were only a handful of the gold and silver stocks that generated such astounding returns.

To put things in perspective let's look at it this way. Had an astute investor divided a $10,000 investment equally among the 6 companies mentioned above in 1975 it would have grown to $7,072,700 just 5 years later! I can't imagine that ever happening again but that is what actually happened back then. It is absolutely amazing, isn't it? Even a 10,000% appreciation would have turned that $10,000 into $1 million dollars! Remember, it only takes a few good investment decisions in one's life to be exceedingly successful and that was such a time.

I know, I know, you think that was then and this is now and increases in excess of 500% let alone 1000% or more would never happen again. Well, that was not the case. Take a look below (chart compliments of Doug Casey's International Spectator) at what happened to the shares of mining companies during the mini-bull market in gold in 1993-1996. The larger producers did well (+84.2%) but look at what happened to a selected group of juniors during that 3 year period. The returns averaged 1,546.4%!

 

[Spectre]

Read the daily email from the daily reckoning today or yesterday - from memory there was a bit where China's getting sick of paying for oil in USD as its dropping. So they're shifting to gold.

Australia provides China with materials, China Supplies the US with consumables, and the US is Broke. Just hope China keeps demanding raw materials.

From watching CNBC or something or other earlier today, the AUD is heading towards the USD and looking to break through parity. So... if the USD isnt worth boo in the world, and the USD isnt worth crap then gold does seem attractive.

 

[lifeurban]

the AUD going up now is not good for commodities. Gold in US$ is making huge gains, but is not making a dent in AU$. GOLD.AX is still at AUD$113 which is very low.

Also not good for Aussie gold mining companies.....

 

[Sunfish]

the AUD going up now is not good for commodities. Gold in US$ is making huge gains, but is not making a dent in AU$. GOLD.AX is still at AUD$113 which is very low.

Also not good for Aussie gold mining companies.....

Then you must deal in gold priced in USD.

Price of gold (POG) in A$ has been range bound for ages, nowhere near earlier highs but if you buy gold with Yankee dollars (not our steroid charged one) you only lose the odd cent exchange when repatriating profits. This is important! Think about it. Remember you must make the profits first and that is not assured in Aussie gold or gold miners. (I have a parcel of Lihir that is STILL underwater.) The simplest way to do that is buying futures. And for those who say you can't leverage gold, you certainly can on the futures market.

A bedtime story: I've no experience of futures but I know how they work. Last Fri night I woke @ 11pm to watch some cricket but I first checked the POG (I ALWAYS do this, night or day) and saw that both POG and POS had collapsed. I decided it was time to dip the toes in and while I was finding a suitable code etc gold started to rise but silver was lagging. This was a safe bet, so with some drama I bought a silver contract. In the interest of discovery I put a "sell" on the contract which was quickly hit and I was nearly a grand richer in an hour. Monday night I went long and last night I went short. I can't believe how easy it is. I'd done a day-trade and got to bed before midnight. How good is that!

At this point I must ask well-wishers recommending caution to save their fingers. I will follow my star, I know the risks.

Disclaimer: The risks involved in investing in derivatives are real. More so than the general market and should only be considered if money management strategies are used.

Another tactic is to buy miners in countries where costs are mainly tied to the USD. Mexico is an obvious choice but I also have a couple of miners in Ghana. One is already a ten-bagger and I have high hopes for the other.

BTW I'm no newbe on this. 'Twas years ago I first posted "Gold good, silver better!" The POG was then about US$300 and silver A$7. There have been bumps which you always get when a price is quoted daily but it beats the heck out of "doubling every seven years".

 

[Sunfish]

The big kicker will be if the USD tanks and the world looks to a reserve currency backed by something tangible.

Watched a Max Kieser video today which suggests that the oil nations, Russia and China want a currency backed by a parcel of currencies and 50% gold.

How the equivalent of the IMF will amass enough metal to back international trade makes my mind spin. This is where I start to accept Keynes' theories that gold is a "relic". It SHOULD be the basis of sound money but I see no way we can unscramble the egg and go back to gold backed money.

If you know a way to buy some Renminby that is possibly the best investment you could make.

 

[Sunfish]

That was quick ($1053 now). Got scared and sold all mine at $1033, doh Now I'm not sure when to get back in again.

Ian (is it Ian or "I an investor"?) by selling you showed you were not committed. Believe! and accept your human frailty (doubt) and get back in the pool.

If you believe, as I do, that the USD has no future and don't wish to "night trade", and why would you? you can buy a single, long dated future contract. I'll admit this ain't easy for a property investor but I have enough "margin" ie "equity in the deal" with my broker that I can buy, assured that I will not be "called" after a bad session. As with all investments, as confidence and equity increases, so does your pot.

 

[Sunfish]

Please forgive me for talking to myself. LOL

When I left this site I want to Kitco as I always do, and the A$ is now over 90c US. If you want to invest in precious metal miners you should trade the NYSE. Comsec and eTrade don't offer the service but it is available in Aus. with cheaper brokerage.

 

[willair]

Ian (is it Ian or "I an investor"?) by selling you showed you were not committed. Believe! and accept your human frailty (doubt) and get back in the pool.

If you believe, as I do, that the USD has no future and don't wish to "night trade", and why would you? you can buy a single, long dated future contract. I'll admit this ain't easy for a property investor but I have enough "margin" ie "equity in the deal" with my broker that I can buy, assured that I will not be "called" after a bad session. As with all investments, as confidence and equity increases, so does your pot.

hmm,if the US dollar goes belly=up then where does that leave us in Australia-it's just not going to happen not as long as the 80/20 rule is still working it's way through the system,,..stuff gold..
..willair..

 

[ianvestor]

Ian (is it Ian or "I an investor"?) by selling you showed you were not committed. Believe! and accept your human frailty (doubt) and get back in the pool.

If you believe, as I do, that the USD has no future and don't wish to "night trade", and why would you? you can buy a single, long dated future contract. I'll admit this ain't easy for a property investor but I have enough "margin" ie "equity in the deal" with my broker that I can buy, assured that I will not be "called" after a bad session. As with all investments, as confidence and equity increases, so does your pot.

Ha thanks Sunfish, I already stated I'm not investing. I would rather night-trade at the moment. I've done fairly well on the ups and downs of gold in the last 12 months. So I'll stick to investing in property and trading in gold/currency.

I will buy gold again at $1020, and if it doesn't get down to that any time soon, I'll re-assess it later.

-Ian