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Micron/China Holding Markets Back

July 5, 2018 Just before the July 4th holiday, the US equity markets were about to rally above a defined wedge formation that has been defining price range for the past 7+ days.  As the markets opened on July 3rd, prices had already started to rally and appeared to be ready to rocket higher by a decent amount.  Yet, by early morning, news that China had banned Micron chip sales in a patent case caused the markets to reverse quite steadily.  This news, as it relates to US chip manufacturers and a major part of the NASDAQ, creates a temporary speed bump in the perceived rally that we have been expecting for weeks. The Technology sector makes up a very large component of the US major indexes.  Other than the DOW, technology firms are spread across nearly every sector of the US major indexes and this case may have some reach to it.  … Continue reading

Gold & Miners To Rally s US Equities Fall On FEA

June 25, 2018 The US Equities markets rotated over 1.35% lower on Monday, June 25, after a very eventful weekend full of news and global political concerns.  Much of this fear results from unknowns resulting from Europe, Asia, China, Mexico and the US.  Currently, there are so many “contagion factors” at play, we don’t know how all of it will eventually play out in the long run. Europe is in the midst of a moderate political revolt regarding refugee/immigration issues/costs and political turmoil originating from the European Union leadership.  How they resolve these issues will likely be counter to the populist demands from the people of Europe. Asia is in the midst of a political and economic cycle rotation.  Malaysia has recently elected Prime Minister Dr. Mahathir Mohamad, the 92-year-old previous prime minister (1981~2003) as a populist revolt against the Najib Razak administration.  In the process, Mahathir has opened new … Continue reading

Bubble Charts: War Between Tech Investors vs. Gold and Silver

The cyclical nature of commodities and equities goes back at least until the 1970’s. When commodities are doing well, equities are performing poorly. Then the cycle flips and investors pile into equities, eventually making them expensive and commodities like gold and silver become cheap. But what do you get when you take the extremes of both equities and commodities? The extreme side of equities, technology stocks (NASDAQ Composite) being driven by lines of code you can’t touch. On the opposite end of commodities, you get tangible precious metals, silver and in particular gold. Tech investors versus gold and silver couldn’t be more different. Their history of being at a tug-of-war has rarely been discussed until now.

When we look at the NASDAQ Composite (NASDAQ) in relation to gold and silver in US dollars, going back to 1971, when the Nixon shock occurred. You get a striking relationship that confirms the cyclical nature between the commodities and equities. This was four years before Paul Allen and Bill Gates read the famous popular mechanics issue highlighting the world’s first microcomputer kit. That magazine propelled the creation of Microsoft. The 1970’s were a period of rising commodity prices, high inflation, a stagnant economy, and multiple recessions.

 

The Pendulum of Gold and Silver vs. NASDAQ Composite

1) 1971 – 1980: Commodities went on an epic bull run, increasing by more than twenty-five times, clearly outperforming the NASDAQ. By 1980, the NASDAQ was incredibly cheap relative to gold and silver.

2) 1980 – 2000: From 1980 onward capital flowed out of gold and silver and the overall commodities complex. as interest rates lowered, and confidence in the public sector was renewed. Equities were the cheap asset class in relation to commodities. This then set up the bull run in technology with the NASDAQ peaking in 2000. Gold and silver by this time were incredibly cheap to the NASDAQ.

3) 2000 – 2011: The cycle rotated back to gold and silver until they peaked in 2011.  This is in contrast to the S&P/GS Commodity Index (GSCI), that peaked in 2008. For gold and silver investors that followed the GSCI, they would have sold out early, as gold almost doubled almost three years later in 2011.

4) 2011- Today: Investors could have rotated into the NASDAQ in 2011, when gold and silver peaked in 2011, as NASDAQ has since almost tripled. Today, both gold and silver are incredibly cheap to the NASDAQ. Today, silver may bounce around, but it will be small moves in relation to the coming years ahead, that just like the past four cycles the beginning moves were small until the end of the cycle. This fifth cycle will swing back to silver and gold and we expect them to outperform the NASDAQ on a multi-year basis during for the fifth rotation.

This back and forth pendulum swinging between the two, confirms the cyclical nature between equities and commodities, but at their extremes.

Gold and Silver Warn Tech Melt-Up

With the manufacturing starting to experience headwinds from the tariffs. Investors are rotating out of manufacturing stocks, and further into technology because for now, tech stocks are less impacted. This rotation may be the final push higher, which investors like Paul Tudor Jones are referring to a second half of 2018 peak in the markets. Remember, based on past cycles we have seen between gold and silver to the NASDAQ Composite, there was a big thrust UP at the peak. Will this time be any different?

As the NASDAQ pushes ahead while the S&P 500 languishes we are experiencing an accelerated melt-up. Is the blow-off-top going to be driven by technology because of the famous FOMO? It doesn’t have the same sensations of Bitcoin in 2017 or the Dotcom bubble yet. But as investors rotate out of Dow components because of trade concerns and into the asset light, businesses you end up at technology stocks. Gold and silver say, yes.

“Rates go up, and stocks go up in tandem at the end of the year. I can see things getting crazy, particularly at year end, after mid-term elections. I can see things crazy to the upside.” Paul Tudor Jones

Was Paul Tudor Jones referring to tech stocks?

US Economy Is Holding Up The World

The US economy continues to be strong, with the underlying ISM Manufacturing PMI at 58.7%, and the US ISM NON-Manufacturing PMI 58.6% for May. No, a recession isn’t in the cards yet. But we sure are getting close as the QE experiment is in tightening mode, and central banks are raising rates around the world.

The Melting Up of Tech Warns – Expect Lower Returns Next 5 Years

For the remainder of the year, it is still quite possible the NASDAQ could go higher, as the NASDAQ is still hasn’t experienced its phrase transition relative to gold and silver. Based on past cycles, there was always a melt-up and outlier for gold, silver, and the NASDAQ. Will the NASDAQ repeat history? With global central bank liquidity decreasing, increasing rates, and the ever-increasing tariffs, maybe it won’t break through the highs in 2002. Investors should reduce expectations to generate the same returns on a multi-year basis going forward as the past five years. For gold and silver investors, this is a massive long-term opportunity.


BULL MARKET SETTING UP FOR GOLD AND SILVER NEXT 5 YEARS

Once the NASDAQ peaks, capital will flow to commodities, setting in the new trend for the commodities boom. From an investors perspective, on a multi-year basis, the reward is clearly to gold and silver, the downside risk clearly to the NASDAQ. Tech investors will swear they will never own commodities. But do you want to continue the streak after the tech boom?

An investor does not need to be precisely right, but just approximately right over multiple years to take advantage of this gold and silver opportunity.

“You only need one bull market to build life-changing wealth. And a new bull market may be knocking at the door…” – Rick Rule

Taking a multi-year view and not shorter-term view, silver and gold are incredibly cheap right now and they stand to benefit from the capital outflows from technology based on the cyclical rotation that has historically occurred. We are only in the first inning or two for gold and silver, particularly when you look at the where the NASDAQ is today.

Takeaways from Tech vs Precious Metals Cycle

  • In all three booms that occurred between the NASDAQ Composite, gold, and silver, there was a melt-up higher for each of them. But the bottom may have already been set in 2016.
  • What is in favor today (Technology) will soon be out of favor in the future, and what is out of favor today (Silver & Gold) will become in favor tomorrow.
  • High-quality businesses with exposure to gold and/silver will give investors an edge to massively outperform the commodities complex and in particular the NASDAQ Composite on a multi-year basis.
  • Don’t marry the trade.
  • Following the Bloomberg Commodity Index is not bulletproof particularly for tech and precious metals investors.
  • Precious Metals will outperform the technology sector over the next 5 years because tech is peaking.

Buy Cheap and Sell to the Crowd

————————————– 

We will be hosting a Live Webcast on Tuesday, July 3, at 4:20 PM ET. Mr. Paul Farrugia (President & CEO) will be discussing an unconventional approach for gold and silver investors in the coming commodity cycle.

There will be no replay. We have limited seats.  

Reserve Your Seat Today

————————————–

 

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China Preparing For Gold To Reenter The Monetary System Thousands Of Dollars Above The Current Price

China Preparing For Gold To Reenter The Monetary System Thousands Of Dollars Above The Current Price

With many people wondering when the paper manipulation of gold will come to an end, it looks like China is now setting the stage for gold to reenter the monetary system thousands of dollars above the current price.

June 17 (King World News) – Dr. Stephen Leeb:  “The Chinese apparently, and with good reason, view Americans as a naïve people that will accept almost anything at face value. When you analyze recent news stories covering or related to U.S.-China relations, you start to see how China is playing on this in gaining the upper hand in a battle for worldwide hegemony…


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Dr. Stephen Leeb continues:  “As China gets closer to achieving its goals, I believe the battle for the East and most of the developing world is nearly over, but I still hope it will allow for a win-win situation that let’s both East and West flourish. Though win-win is looking a little more quixotic these days, I’m still hoping the U.S. can emerge as a vibrant 21st century economy.

Gold Reentering The Monetary System
Whatever the outcome, though, the real winners will be those who bet heavily on commodities and especially on gold. As I have pointed out before, gold and the yuan have become closely linked. Both the 52-week and 200-day moving averages of gold’s price in yuan have been remarkably steady for more than a year. Whether this is due to arbitrage or manipulation, it really does not matter: The message is that the yuan has become as good as gold.

This is the first step in creating a gold-based monetary system that will govern in the East – and if the West is smart, in the West as well. As China clears away the obstacles to ever more Eastern trading in yuan, gold will rise longer and higher than most people imagine. The current transition is arguably the most significant in the history of modern civilizations.

But as I said, China has managed to keep its progress well disguised. Let’s begin with the recent Korea summit between President Trump and Premier Kim. The clear takeaway is that the U.S. will be willing to limit its military involvement on the Korean peninsula in exchange for North Korean denuclearization. Unlike the many skeptics, I believe this actually will happen, along with a much more vibrant North Korean economy and eventual North-South reunification. Moreover, I believe the denuclearization will happen fairly quickly, and that by the turn of the decade there will be little doubt about the outcome.

By 2020, China will be helping to turn North Korea’s nearly moribund economy into one that is vibrant and trading with many other Eastern partners. The entire Korean peninsula will be well on its way to joining the Eastern economic bloc of countries. If you’ve followed my King World News interviews with for a while, this prediction shouldn’t be a surprise. Nearly one year ago on KWN I talked about Korea in the wake of Steve Bannon’s exit from the White House. That exit had been precipitated in part by comments Bannon had made that contradicted Trump’s bluster. Specifically, Bannon said it was nonsense to believe the U.S. had a military option, because any military action would lead to the deaths of 10 million people in Seoul in the first 30 minutes through conventional weapons alone.

I noted then:

“Bannon raised the idea of a deal in which China would get North Korea to freeze its nuclear build-up and agree to verifiable inspections in exchange for the U.S. removing all its troops from South Korea. But he called the likelihood of that happening remote.”

My comment at the time was:

“I don’t think such a deal is farfetched…there are few alternatives…The big picture is that China continues to make unrelenting progress in uniting the East and the developing world under its umbrella, while overcoming whatever remaining obstacles the West could pose.” 

A week before that, talking about the North Korea nuclear threat, I said:

“The current crisis could easily mark America’s last gasp at keeping a foothold in Asia as well as in the rest of the East. These geopolitical implications should be seen as potentially momentous and as enormously positive for gold.”

That was a year ago, and everything I said then seems borne out by the most recent events. Stay tuned.

Now some thoughts on ZTE and the state of Chinese technology in general. In mid-April, the U.S. government charged Chinese phone maker ZTE with violating a previous sanctions settlement and banned ZTE from buying U.S. technology for seven years. ZTE indicated that once its inventory of critical products was used up, the company would have to cease operations, and 75,000 employees would lose jobs. You could almost hear the sighs of relief among Americans who had feared China had caught up, or nearly so, to the U.S. in developing critical technologies. The putative plight of ZTE seemed to say there was no need to worry, and that for the foreseeable future the U.S. would continue to call the shots in the tech arena.

In line with this, on June 10 The New York Times introduced a new weekly feature by Li Yuan whose mission was to examine “the paradox of modern China through the lens of technology.” The inaugural article focused on ZTE. Examining whether China really has “defied the axiom that a free political system and economic growth go hand in hand”, Li wrote that: “As the Chinese ask how they can keep up, many are also wondering why they didn’t realize they were so far behind to begin with.” 

There’s a problem with this analysis, however, which is that loss of access to U.S. suppliers did not necessitate the failure of ZTE. The optical chips and the more important SoC chips, the critical components of a phone’s modem and operating system, are available elsewhere, from South Korea and Taiwan, for example. In fact, another potential supplier is Huawei, a private Chinese company that is the leading developer and manufacturer of smartphones in China and perhaps the world.

Unlike ZTE, Huawei is a vertically integrated company, which means it makes both hardware and software for its phones. Though the company imports about 25 percent of its phones’ components from the U.S., these are commoditized products available from a number of other suppliers outside the U.S. and in many cases in China itself. Huawei, similar to Apple, has firm control of both the software and hardware it requires. Both companies use Taiwan Semiconductor to manufacture their internally designed SoC’s.

The latest versions of each SoC are Apple’s A11 and Huawei’s Kirin 980. When compared on the most popular benchmark, AnTuTu, the Kirin is ahead by about 50 percent and indeed blows out all other SoC’s as well. One website, Archyworldys, called the Kirin’s benchmark reading, “a real leap into the unknown.” Yet Li’s article failed to mention Huawei.

I see two possible explanations for the whole ZTE situation. One is that China wants to keep the U.S. at bay by appearing to be less technologically advanced than it really is. The New York Times is an inadvertent partner in this strategy. I’m sure I sound like a broken record, but once again I must cite The Art of War’s oft-cited maxim that it’s smart to show your weakness, hide your strength.

The other possibility is that China’s government decided to make an example of ZTE to warn other Chinese companies that if they become too dependent on the U.S., they won’t get a chance to find new suppliers. It’s possible, maybe even likely, that the government told ZTE that it had made a mistake and must pay for it.

A final comment: one other thing Apple and Huawei have in common is that they both use the same China-based company, Foxconn, to assemble their phones. That should tell you a lot about which country, the U.S. or China, could lever the greatest blow against the other.

The Gold Road
I want to briefly return to how China is paving the road – perhaps more precisely the Belt and Road – for broad-based yuan/gold backed trading. China is off and running in trading its yuan-based oil benchmark. That the yuan can be exchanged for gold may be one reason for the tight relationship between the yuan and gold. It may be a natural consequence of arbitrage (plus, perhaps a little meddling from the Chinese).

And the “good as gold” yuan is spreading its wings. Just this week the lead article in “liveMint”, a well-respected financial daily out of India, had the following subhead: “China has chosen the right time to step up its efforts to make the yuan a global currency.” The article points to a recent forum in Harare, Zimbabwe in which 14 East African and Southern African countries met to consider using the yuan as a reserve currency in the region.

These countries all owe large debts to China, clearly giving China the leverage to make it happen. The article states:

“After becoming the preferred trade partner for the African continent, China’s ambitions have expanded to operate the preferred reserve currency for nations in the region. This strategy could have significant consequences at a time when Africa is being touted as the ‘next factory of the world’ after China…one may take manufacturing out of China, but one cannot take China out of manufacturing.”

Equally significant was news out of Dubai in late April. The Reuters headline was “Abu Dhabi, Shanghai plan exchange focusing on China trade.” Richard Teng, head of the Abu Dhabi Global Market (ADGM), noted “the new exchange will support not only the Belt and Road initiative but also the internationalization of the Chinese yuan in the region.”

China’s ultimate goal, as I’ve discussed before, isn’t to replace the dollar with the yuan. Rather, it’s to create some sort of basket of currencies and commodities linked to gold. The size of the Chinese economy and its vast gold holdings will give it enough sway over any such basket while sparing it the headaches associated with having a reserve currency.

For investors, the bottom line is that whether the new reserve currency is the yuan itself or a basket, transactions will be gold-backed, implying a gold price many times the current level and many times the past high. The message is to ignore the day to day turbulence and continue to insure your future by aggressive accumulation of gold.”

To listen to the timely KWN audio interview with James Turk that discusses the smash in the gold and silver markets CLICK HERE OR ON THE IMAGE BELOW.

***ALSO JUST RELEASED:  ALERT: Criminal Bullion Banks Shorted The Hell Out Of Silver Ahead Of Yesterday’s TakedownCLICK HERE.

 

 

I Like the Penny Stocks Right Here and Right Now

May 16, 2018 By Dudley Pierce Baker http://JuniorMiningNews.com http://CommonStockWarrants.com Hello Investors, Crazy as it may sound, I love this game of investing in the penny stocks and possibly some of the stock warrants trading on resource companies. While some of you may believe this is a crap shoot there is actually some logical reasoning that could make you a substantial amount of money in the up coming bull market in the resource sector. Higher gold, silver and copper prices are coming believe it or not. Yes, gold has just plunged below $1300 for the first time in many months but as I write, it is holding around the .618 retracement of $1290 or so. True, I do not want to see much more of a decline from here and we really need to get back above $1300 ASAP. So, my cautionary warning for you, is that you should be prepared … Continue reading

New Articles from Chris Vermeulen – The Technical Traders


Hello Investors,

I am happy to now be sharing some great investment content with you from
our friend Chris Vermeulen at TheTechnicalTraders.com.

US Indexes Setup Bottom Confirmation Pattern

Congestion Basing Can Present Incredible Opportunities

Enjoy the read,

Dudley Pierce Baker
Founder – Editor
http://JuniorMiningNews.com
http://CommonStockWarrants.com

Congestion Basing Can Present Incredible Opportunities

  May 12, 2018 Chris Vermeulen     Our research team wanted to alert our followers to the incredible opportunities that continue to present themselves in the current market.  While many people have been overly concerned about a market top and price rotation in the US majors, the Energy sector and many others have seen incredible price moves. Take a look at this XLE chart as an example.  Yes, we know that Oil has rallied from about $60 to closer to $70 recently, yet we want you to focus on the price pattern that setup this move in XLE.  Specifically, we want you to focus on the Multi-Month Base pattern in price between early February and early April of 2018 as well as the upside breakout that followed. In true technical analysis theory, price tells us everything and indicators assist us in relating current price movement/action to historical price movement/action.  … Continue reading

US Indexes Setup Bottom Confirmation Pattern

May 6, 2018       On Wednesday, May 2, we issued a research post supporting our position that the markets were nearing an apex breakout and that critical support and resistance levels had established within the market.  We indicated that volatility is usually quite high throughout these apex breakout moves with the potential for a “wash-out” price rotation in the works.  In other words, as these apex breakouts happen, price can sometimes, falsely, break to one side or the other and rotate very quickly to the other side – creating what we call a “wash-out” price reversal. Closing out this week, prices broke lower on Thursday, May 3, and reversed sharply before the end of the trading session to create a “wash-out” low formation which is indicative of a price bottom.  We felt strongly that our ADL price modeling system’s analysis as well as this bottom formation are strong evidence that the US … Continue reading

Bloomberg Commodity Index Is Near An Upside Breakout

John Murphy | April 21, 2018 at 05:20 PM Editor’s Note: This article was originally published in John Murphy’s Market Message on Thursday, April 19th at 12:11pm ET BLOOMBERG COMMODITY INDEX IS NEAR AN UPSIDE BREAKOUT… This week’s surge in commodity prices is starting to attract a lot of attention. That’s because rising commodity prices are a leading indicator of inflation. Rising commodity prices have a lot of intermarket implications. For one thing, rising commodity prices usually cause Treasury bond prices to fall and yields to rise (as they’re doing today). That usually helps stocks tied to commodities and those that benefit from rising rates (like banks and financials). But it would hurt rate-sensitive bond proxies like staples, utilities, and REITS. Rising bond yields could, however, cause the yield curve to steepen and relieve recent concerns about it falling to the lowest level in a decade. Let’s look at some … Continue reading

Gold Should Be at $16,450 & Silver $761


April 19, 2018

The super powers in the West are doing what they can to provoke Russia and indirectly China and Iran into a world war. Most people alive today were not adults when WWII started and therefore did not follow the lead up to the war. But today the whole world can watch how the West has chosen to attack a country which has no major significance geopolitically and does not threaten any other country. Still the West clearly knows that bombing of Syria can start a global conflict with potentially horrendous consequences.

There is no intelligent reporting of these events in the Western media. Whatever propaganda the media is fed, they just publish it without any analysis or investigation. And the US with its allies do not wait for any independent verification of alleged use of chemical weapons. That a world war could start on such fickle reasoning is absolutely frightening.

UK & US STARTS A WAR TO DIVERT ATTENTION FROM DOMESTIC WOES

Syria is of course only an excuse. As a country it would be of no consequence for the safety of the rest of the world if it was left alone. Most wars are started by nations which are under economic pressure domestically. The US and UK fit that picture perfectly.

With debts growing exponentially and massive budget and trade deficits, both these countries are on the way to bankruptcy. Added to that, their leaders are under major pressure at home. Trump has “Deep State” and impeachment pressures and Theresa May suffers from weak leadership in a minority government with an unresolved Brexit. This is the perfect background for pretending that there is a major global conflict and diverting the attention to the international scene.

It is only Russia’s restraint which has so far stopped this conflict from turning into something very serious for the world. We must remember that Russia only has two military bases outside of their country whilst the US has around 1,000. Also, according to independent experts, Russia’s military might is far superior to that of the US. But in the case of a nuclear war, both countries have more than enough power to destroy the world. So we must hope and pray that it won’t come to that.

PROTECT AGAINST FINANCIAL RISKS

Virtually nobody can protect against a global nuclear conflict. But we can protect against local conflicts and we can protect against a financial crisis. In 2001 we decided as a company that protection against a potential financial crisis was an absolute necessity. Thus we took the decision to invest in physical gold for our clients and ourselves. At the time, I regarded the continuous deficit spending, credit growth and the derivative time bomb as major risks.

The best time to make a strategic and long-term investment decision is when the asset you intend to buy is unloved and undervalued. That was certainly the case with gold at the time. Gold had been going down for 19 years from $850 in 1980 to a low of $250 in 1999. Central banks around the world had been selling a major part of their gold. The UK and Switzerland comes to mind as two countries selling the majority of their gold around the lows – a very good buying signal.

As we were forecasting a potential financial crisis at some point in the future, we recommended, in early 2002 to our investors to buy gold for up to 50% of their financial assets. Gold was then $300. At the time this was quite a radical proposition, especially since gold was then a barbarous relic that was totally out of fashion. The advantage with buying an undervalued asset that is not on the front pages, is that the risk is so much smaller than when the trade becomes crowded.

GOLD READY FOR THE NEXT STRONG MOVE UP

The timing was quite fortunate. As the chart below shows, gold rose every year from $300 in 2002 to $1,920 in 2011. In 2013 a bigger correction started which ended in 2015. Since then gold has only moved up slowly just like it did in 1999-2001.

In my opinion, gold is now in the process of breaking out from the 5 year consolidation. We need to get proper confirmation with a move to $1,400 but the position of the quarterly chart confirmed by the rising MACD indicator is a strong sign that the next move in gold to new highs is imminent.

The chart below also shows that gold is in a strong uptrend and that the correction in the last 5 years is minor and finishing.

PHYSICAL GOLD IS HELD FOR WEALTH PRESERVATION NOT FOR SPECULATION

We must remember that gold is not bought or held as a conventional investment for capital appreciation purposes. No, gold has a much more important function than that. Our company invested in gold in 2002 because we identified the risks in the financial system as very high. But today the risks are substantially higher and the reason for buying physical gold even more compelling.

WE BUY PHYSICAL GOLD BECAUSE:

  • It has been money for 5,000 years
  • It is the only money which has survived throughout history.
  • It guarantees stable purchasing power over time.
  • It is scarce – It cannot be printed. (Unlimited paper gold creation will soon collapse.)
  • It is durable – All the gold ever produced still exists.
  • It is nobody else’s liability – Thus no counterparty risk.
  • It is held and traded outside a fragile financial system – Thus gives independence.
  • It is the ultimate wealth preservation asset and insurance against a rotten world economy.

GOLD BUG?

It might appear that I am a gold bug but that is far from the case. We bought gold in 2002 to protect against the colossal risks we saw in the world economy and financial system. We are not in love with gold but believe that it is the best protection you can buy and own today. At some point gold will be overloved and overvalued. Then we will recommend to our investors to sell some of their gold or swap it against other assets which are unloved and undervalued. But I expect that time to be quite a few years away.

INFLATION ADJUSTED GOLD SHOULD BE $16,450 AND SILVER $761

Today at $1,350, gold is as unloved and undervalued as it was when we bought in 2002 at $300. On an real inflation adjusted basis gold at $1,350 today is at the same level as in 2002. (see chart below) and also at a 300 year low. The 1980 gold peak at $850, adjusted for inflation, would be $16,450 in today’s money – 12x higher than currently. That price is more in line with our own targets.

Silver is even more undervalued. On the same inflation adjusted basis, silver is also at a 300 year low. At $17.20 today, inflation adjusted silver is the same as in 2000 at around $4. And the 1980 silver high of $50 would today be $761 – a 44x increase from here.

Gold at $16,450 and silver at $761, makes the gold-silver ratio 22, which is in line with historical levels. But since the ratio is just below 79 today, it means that silver will move almost 4x as fast as gold.

GOLD AND SILVER ARE AT HISTORICAL LOWS – INFLATION ADJUSTED

Bearing in mind that credit creation has been exponential in this century with global debt having doubled to $250 trillion since 2006, gold has in no way reflected this money printing and total destruction of paper money. So this is still to come. Once the intervention in the paper market fails, which could happen at any time, the moves in gold and silver will be explosive.

The time to own physical gold and silver is today and not when they move to new highs. Both metals are at inflation adjusted historical lows and the downside risk is minimal. Also, they probably are the most undervalued of all assets currently.

With geopolitical, economic and financial risks at an extreme high, please don’t ignore these risks and don’t ignore history. And with the precious metals at extreme lows, it would be very unwise not to own substantial protection in the form of physical gold and silver.

Egon von Greyerz
Founder and Managing Partner
Matterhorn Asset Management AG