It can be difficult, even for dyed-in-the-wool perma-bulls to hold onto precious metals, let alone buy more. We see the Dow trading above 20,000 (placing this into perspective, is that since 2000, the Dow is up around 65% versus gold’s 300%), gold and silver currently languishing below multiple “resistance” points; suspended just above a couple of “support” lines. For long-suffering holders, it feels like the fabled Sword of Damocles dangling over their head, suspended by that proverbial single strand of hair.
If you fit the above description, the following chart should provide good cheer. You’ll notice that since 1925, a few years before the Great Depression, up until the current day, financial assets (paper) – bonds, large cap stocks, and derivatives – have never been more overvalued in relation to metals and minerals, than they are now.
Financial (Paper) Assets vs. Real (Metals/Minerals)Assets (Courtesy Sources Listed)
What you must realize, is that if you truly desire to “insure” some of your own financial assets against a major turn of events with the potential to heavily damage their value, then it is imperative to seriously consider a position in the asset class which above all others, tends to move in direct opposition to them.
The “kicker” is that, at such undervalued rates, when – not if- the metals return to the norm, that movement, plus the almost inevitable overshoot, makes it close to a lead pipe cinch that you’ll be looking at a big profit on your purchase as well. The metaphorical rubber band stretches just so far, then reverses. And that class has at its apex, gold and silver.
It’s not just an article of faith, but rather a proven fact that the more out of favor a category is, the less downside risk and the greater upside appreciation potential there will be. Markets move up on sustained buying – in the earliest stages rising on a so-called “wall of worry” – wherein in spite of all the naysayers’ protestations, the price of the item in question continues to move higher. Later as the trend matures, you’ll see stronger upward movement with less and less objection from observers ,and more writers agreeing with the move. This signals that “more people are joining the parade”, with less watching. Finally, almost everyone is “all-in” with lines around the block as late-comers frantically try to buy what little remains of gold and silver in retail hands – but we are far from that situation today. Sure it’s “easy” to buy the Dow above 20,000, and as it rises on reduced volume, large numbers of IRA investors are doing just that. But big money is seldom made this way.
The Five Categories of a Gold Miner’s Ore Body
Whether in production, or on a path toward it, a mining company needs to determine via expensive drilling, magnetic testing, laboratory sampling and computer modeling programs, how much gold-bearing ore they have, and how likely what they possess – or think they hold – can be produced at a profit. The …read more
Source:: Gold Silver Worlds
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