Gold

[BIRMANBOY]

Theres a reason why "most" people/investors dont follow and or support PM stocks and the like....its because they dont trust them. Simple really. If you spent as much time and effort and energy in other more mainstream endeavours your productivty would be mind boggling. Don Quixote has nothing on this "impossible quest". Love your last sentence, "Hang in there, my friends. Our time will come. In fact, I predict that someday we'll wonder why anyone doubted it in the first place" ,......maybe but will they live long enough and have any hair left.

SEVERAL REASONS WHY GOLD SHARES WILL SOAR

Reason #1: Gold stocks have leverage to gold bullion prices. In spite of what's occurred recently, history is on our side here, as the track record of precious metals equities demonstrates they can reward patient investors tremendously. They rose:
• 950% from January 2001 to January 2008.
• 700+% from 1970 to January 1980, including 289.5% in the last thirteen months of that period.
• 211% in less than 24 months in the mid 1990s.
• Even during the Great Depression, the two largest producers at the time - Homestake Mining and Dome Mines - rose 474% and 558% respectively.
It's normal for gold stocks to demonstrate this kind of leverage to gold. It would completely contradict the historical pattern - and common sense - for gold stocks remain where they are until this bull market ends.
(And sometimes, even when the price of gold bullion falls, gold stocks can still offer big upside. Case in point: in the 24 months from January 1, 1981 to January 1, 1983, while the price of gold bullion fell by 25% - from $597 to $446 - gold stocks rose 72%. A series of giant gold discoveries in Canada set off a mini-mania in the equities.)
Check out the historical record, which includes some mind-boggling performances by juniors.
Reason #2: Gold stocks are grossly undervalued. Gold stocks aren't just inexpensive, they're stupid cheap. Their current undervaluation is more than just compelling... it's fire-sale attractive. It should have your full attention.
Just look at the data and you'll see what I mean:
• Relative to gold, the equities have not been this cheap since the waterfall selloff in 2008. The HUI/gold ratio is roughly 0.27, close to its bottom of 0.24 in October 2008. It hovered between 0.50 and 0.60 for most of a five-year period from 2003 to 2007, and exceeded 0.60 several times.
• On average, and in spite of weak gold prices at present, industrywide margins are roughly $1,000 per ounce. The price of gold wasn't even $1,000 30 months ago.
• As a group, gold stocks are selling for less than their net asset value... by 20%. They traded 60% above their NAV in 2007, a common level for precious metals equities.
• Average P/E ratios of the 10 largest gold producers are less than half what they were just two years ago.
• As we mentioned a few weeks ago, for a $1,000 investment right now, you can get about 0.6 ounces of gold. For the same $1,000, however, you'd get four ounces of gold by buying shares of Goldcorp or more than five ounces by buying Eldorado Gold.
This undervaluation cannot and will not last. Even the trader who knows nothing about Newmont or Barrick or Goldcorp will sooner or later want to jump on this - and if he doesn't, his boss will want to know why. Read what one Sprott fund manager thinks about gold stocks.
Reason #3: Gold stocks are universally under-owned. There are plenty of reports about how little gold and silver the average mainstream investor owns - which likely means they own even less of gold equities. But the disconnect is bigger than you realize...
In the institutional world, pension funds sit at the head of the table. However, the typical fund devotes only 3% to commodities, and of that 3%, only 5% is committed to gold and gold stocks. In other words, only 0.15% of assets are in gold and another 0.15% in gold mining stocks, a pathetic total of less than one-third of one percent. Ditto other institutional investors.
Given the gamut of sovereign risks in virtually the entire world, even the developed world, the lack of gold and gold stock ownership is appalling. That will change as the growing fiat currency risks around the world impact investors more deeply.
Reason #4: All that cash has gotta go somewhere. It's one thing to say gold stocks are under-owned, but is the money available to buy them? One could make an argument that any rush into gold equities would be muted if no one has any savings or if demographics dictate that a fifth of the developed world will soon be retired.
At the end of Q1, S&P 500 corporations had $1.7 trillion in cash and another $4 trillion in short-term investments. The M1 money supply is currently $2.2 trillion. Pension assets exceed $31 trillion, more than twice the size of last year's GDP in the US.
Contrast those figures with the market cap of all primary gold producers trading in North America: about $800 billion. Or the market cap of all primary silver producers: a measly $32 billion.
• If corporations moved 5% of their "short-term investments" into gold stocks, the market cap of the industry would increase by 20%.
• If they chose silver stocks, it'd grow by a factor of six.
• Five percent of M1 would increase the market cap of gold producers by 14%; it would be 3.4 times bigger than the entire current value of all primary silver producers.
• If pension funds doubled their allocation to gold stocks (making it a puny 0.6% of total assets), it would amount to $93 billion in new purchases. If they went to 5%, $1.5 trillion would flood the industry.
Check out the chart of these data. And by the way, don't forget other corporations in the US and around the world, insurance companies, hedge funds, sovereign wealth funds, mutual funds, private equity funds, privat e wealth funds, ETFs, and millions of global retail investors. There are, quite literally, tons of cash available for investment in whatever sector the mainstream targets.
What if they all enter the gold market at or near the same time?
Reason #5: Physical gold may become hard to get. The gap between supply and demand isn't letting up. Since 2001, worldwide production is flat, despite a sixfold increase in the gold price - and demand has grown from $3 billion to $80 billion.
I'm in touch with bullion dealers on a regular basis, and they're all saying the same things. Andy Schectman of Miles Franklin insisted that the bullion market "will ultimately be defined by complete lack of available supply." Border Gold's Michael Levy cautioned, "If an overwhelming loss of confidence in the US unfolds, the demand for physical gold and silver will far outweigh all known inventories." And Mike Maloney of GoldSilver.com warned that if shortages develop, "physical bullion coins and bars might become unobtainable regardless of price."
As increasing numbers of people view gold as a must-own asset, and as supply is not keeping up with demand, where is the next logical place for investors to turn to get exposure? Gold stocks.
Imagine the plight of the mainstream investor who calls a bullion dealer and is told they have no inventory and don't know when they'll get any. Picture those with wealth finally becoming convinced they must own precious metals and being informed they'll have to put their name on a waiting list. Imagine a pension fund or other institutional investor scrambling to get more metal for its fund and being advised the amount it wants is "currently unavailable."
Mining equities would be the fastest way to meet that demand. It'll be the next logical step to take - maybe the only sensible step available if the supply of physical metal remains constrained. It will feel like the most natural thing in the world for them to do. It is indeed the overlooked reason gold stocks will soar.
Reason #6: Gold has a lot further to climb. This is why I'm convinced gold stocks will soar again: a rising gold price. Many investors have focused on gold's lackluster movement for the past eight months, forgetting that it rose a total of 2,333% in the 1970s - with much less currency dilution than we have today. For gold to match the same percentage rise from its 2001 low, the price would hit $6,227 per ounce. Nothing says it has to match that price - but neither does it have to stop there. Given the ongoing caustic actions of politicians, we see much more upside risk in gold than downside.
And here's the key for gold stocks: once the gold price resumes its uptrend and begins making new records again, all sorts of investors - from large market-moving institutions to small retail buyers - will return to gold equities. I suggest beating them to it.
Reason #7: "The boat" has a leak. The dilution of our currency is on a nonstop - and scary - trajectory. Just since January 1, 2000, US dollars have lost a whopping 26% in purchasing power. The Canadian dollar has lost 23%. This is a serious and gross devaluation of what we use for money. Meanwhile, gold has gained 325% in purchasing power (after accounting for inflation as measured by the CPI, which understates the amount of inflation by a considerable amount). And this is while the gold price has gone nowhere since last September.
The problem is, the leak in our economy is only going to get bigger. The monetary base now exceeds $2.6 trillion, up 215% since January 2008; the national debt is over $15.7 trillion and will conservatively reach $20 trillion in just three years; the $1.3-trillion US budget deficit, which is more than the entire US budget was just 20 years ago; the approximate $4 trillion in US Treasuries held in foreign central banks, many of which continue making arrangements to bypass the dollar; the vulnerable and propped-up economies around the globe; the still-unresolved European debt crisis; the many negative real interest rates that show no sign of reversing course anytime soon.
These are massive megatrends that won't be reconciled without further, serious dilution of the currency - it's the only politically acceptable way to decrease the debt burden. This is why we're convinced more money-printing in the US and around the world is highly likely - whether they call it "quantitative easing" or try to hide it under some other guise - especially if we get another deflationary scare. With the only logical choice being to print, gold will be forced higher by an order of magnitude.
I say all this about gold because I think that is the key to gold stocks. If gold and silver are destined for higher levels, gold stocks will follow. I know they haven't demonstrated that for a while now, but slumps don't last forever.
The bottom line is this: Gold stocks do respond when gold goes higher - and gold is going higher because of completely unsustainable fiscal and monetary actions of governments all around the world.
So, will gold stocks really soar again someday? The historical record of gold stock manias... the extreme undervaluation of gold equities... the lack of mainstream participation in our market... the abundance of available cash... dwindling supply and rising demand... the massive disconnect between gold and gold stocks... the likely trajectory of the gold price... and last but not least, the political compulsion to dilute the currency further... all these factors point to an incredible opportunity to buy gold stocks at extremely low levels and someday realize potentially life-changing rewards.
Hang in there, my friends. Our time will come. In fact, I predict that someday we'll wonder why anyone doubted it in the first place.

[JBmurc]

I didn't write the above but agree with it ..

well we will see ... my fav gold producer PGI will produce gold at $331oz and start to pay divvies next year it's current market value could be brought back by it's cashflows each year going forward no reason they won't pay a 10% divvie p.a and still have the cash to move towards mid-cap producer 150koz+ p.a



This past Wednesday, June 18, 2012 the FDIC ( Federal Deposit Insurance Corporation, USA ) Proposed Rule Changes to categorize gold as a Zero Percent Risk-Weighted, Tier 1 Asset.

This is significantly bullish for gold in the long term as this potential systemic change could drive gold demand and gold prices much higher.

In light of the global financial downturn, cash and bonds have begun to lose their luster as Global Financial Regulators Have Begun To Recognize the implied risks behind these paper assets.

In a world characterized by central bank printing binges and rampant government spending, banking regulators are quietly being forced to recognize one of the only remaining counter-party risk free assets: Gold.



http://goldsilver.com/article/fdic-t...term=read+more

[Skol]

The Indians are selling gold not buying it.

I can't imagine that goldbugs, many of whom I consider to be of somewhat limited intelligence, spending their evenings studying 'Tier 1 Assets".

Some central banks have been buying gold this year I discovered 2 days ago, and gold still goes down.

Most ASX indices up today, except gold, down another 1.5%, the bottomless pit and road to ruin.

[elZorro]

The Indians are selling gold not buying it.

I can't imagine that goldbugs, many of whom I consider to be of somewhat limited intelligence, spending their evenings studying 'Tier 1 Assets".

Some central banks have been buying gold this year I discovered 2 days ago, and gold still goes down.

Most ASX indices up today, except gold, down another 1.5%, the bottomless pit and road to ruin.

OK, I'll bite..

1. The Indians are selling gold, not buying it
They might be net sellers at the moment, what about the peak buying season (festivals and weddings) coming up?

2. Can you prove that goldbugs are any less intelligent than contrarian investors for example?

3. Central banks are buying gold. Guess what happened in the last 3-4 hours, gold recovered $40 to just under $1600. It's crashing all right.

Many miners report their average cost of gold extraction once mining, to be US$900 or so. Add in massive exploration costs, and this puts a bottom on the price.

[Skol]

1. The Indians are selling and the govt is even looking at banning the sales of gold coins by the banks in an effort to curb overall gold demand. The President of the Bombay Bullion Association expects $1400 gold this year and maybe lower. Jim Rogers reckons gold could fall 40-50% if the Indians cease gold imports.

I've heard the rain isn't falling in India, less rain means less crops, means less gold sales.

2. A lot of goldbugs are naive in the extreme, amateur economists following the teachings of the internet 'experts' like Jim Sinclair, the Aden Sisters, Peter Schiff, Max Keiser, Eric Hommelberg and scores of others. These amateurs can't think for themselves, they rely on the prognosticators, not thinking for a moment that gold is risky and that trying to get rich quick off it is even riskier. They always present the world as being on the brink of ruin, we're all doomed, buy gold or else you'll end up in the poorhouse. One particularly bad offender of this strategy was Glenn Beck who convinced millions of unsophisticated Americans that if they didn't buy gold they were finished financially. Apparently Glenn has now sold all his gold and thanks his viewers for making him millions. Beck's show stopped, coincidentally, about the time gold hit its peak.

Goldbugs are always on the lookout for the next crisis that's going to send gold into deep space and portends the end of the economic world as we know it. These layman economists profess to know more than Alan Greenspan and Ben Bernanke who they deride as incompetent and involved in a government conspiracy to place a lid on the price of gold, conspiracy theories being central to the goldbug philosophy. e.g. Fort Knox is empty: what kind of pinhead imagines that the garrison commander Major General Jefforey A. Smith, who has access to the vault is going to write in his reports that 8800 tonnes of gold is there when it isn't?

I can tell that many goldbugs are grossly overexposed to gold and silver, a policy that may be their undoing, they think that gold is 'rare' and 'scarce', even thought there's 180,000 tonnes of it stashed away.

They despise the Rothschilds, anti-semitism runs through the heart of the goldbug philosophy, they blame the Rothschilds and other Jewish bankers for the world's ills and read books like The Protocols of the Elders of Zion.

After the rout in silver prices last year, the WSJ reported that one dimwit who had bought at the top was outraged that silver had halved in price said "I heard that silver was going to $150". Another harebrain said that his gold shares were going up to a particular figure, and when someone did a calculation it amounted to a 570,000% gain, someone else a while back said he expected gold to go to $1,000,000 and ounce.

They honestly believe that fiat money is finished, that next year when I rego my fox terrier I'm gonna be doing it with pieces of 8 or gold sovereigns. They have believed for the last few years that the USD is finished, gonna be 'confetti', and that hyperinflation is just around the corner and the gold standard is on the way back.
One even told me that it's just not possible for gold to fall below $750, because that's the cost of extracting it from the ground. It's amazing, the naivety, he thinks that gold is in such demand that mining MUST go on and can't possibly comprehend that if gold drops enough, mining will stop.
Actually in todays paper it says the cost of extraction for OGC is US$1126.

There's a fortress mentality amongst goldbugs and rampant paranoia, feelings of persecution by the Rothschilds and the 'elites', that they haven't had a fair go in life, and that the 'banksters' are manipulating the price of gold and silver and stopping them getting rich. They bury gold in the garden, hide it and don't insure it, because telling the insurance company might tip off the gubbermint who might come and steal it.

I'm often vilified as a 'gold hater' because I'm sceptical of the outrageous claims made by goldbugs, they only want to hear good things, not bad things. When gold goes up it's 'gold on its way to the moon' when gold goes down it's the 'manipulators' and JP Morgans fault. Many goldbugs are in dire need of psychotherapy. They have their own slang, 'gold haters', 'painted charts' 'mainstream press', 'govnuts' and 'the dark side'.

Then there's the 'New World Order' and the 'Illuminati', some are religious cranks that hang on every word of demented Pastor Lindsey Williams.

You get the drift?

3. Central Banks have been buying gold all year and the price has dropped, yes it went up last night, so did all commodities.

This from Reuters:

Gold coin consumption, viewed by some as a market-fear gauge, tumbled in the second quarter to levels not seen since before the 2008 economic crisis, reflecting the metal's failure to attract safe-haven bids despite economic uncertainty.

Sales of the U.S. Mint's American Eagle gold coins fell more than 50 percent year-on-year to 127,500 ounces in the second quarter, their worst three months since the second quarter of 2008 -- prior to the height of the global economic crisis, the Mint's website showed.

Physical gold buying in major consumer India picked up a little on Friday. Weakness in Indian demand has undermined spot prices this year, with Indian gold prices near record highs due to rupee weakness.

Check this out:

www.investingdecoded.com

[JBmurc]

13 states now are seeking approval from their state governments to either issue their own alternative hard currency or explore it as an option.


http://money.cnn.com/2012/02/03/pf/s...cies/index.htm

[Skol]

13 states now are seeking approval from their state governments to either issue their own alternative hard currency or explore it as an option.


http://money.cnn.com/2012/02/03/pf/s...cies/index.htm

Hey EZ,

While we're on the subject of gullible goldbugs here's one right here, JB Murc, he's been preaching the end of fiat money, the end of the USD, and hyperinflation for years and who's currently losing heaps on 1500 oz of silver in the basement.

[JBmurc]

Hey EZ,

While we're on the subject of gullible goldbugs here's one right here, JB Murc, he's been preaching the end of fiat money, the end of the USD, and hyperinflation for years and who's currently losing heaps on 1500 oz of silver in the basement.

""What the wise man does in the beginning, the fool does in the end""......

I've been preaching one must diverse one's investments nothing wrong with holding some gold/silver bullion,property,shares etc I've never once stated one should only hold bullion !
.....Any sane human knows the worlds fiat debt woes are only being fixed by temporary solution's....every 30 seconds the US debt grows 1.4 million ...unemployment rises ....numbers get fixed,,,Fiat money gets created fills the debt gaps till next time ,,bail out here bail out there....no law for some completely .....different law for the rest (corzine "I don't know where 1.2billion went" )

I don't have to preach the end of fiat money it's a Historic fact...

The history of fiat money, to put it kindly, has been one of failure. In fact, EVERY fiat currency since the Romans first began the practice in the first century has ended in devaluation and eventual collapse, of not only the currency, but of the economy that housed the fiat currency as well....please those of slow learning (thats you sparky re-read till you get it)

[Lizard]

The history of fiat money, to put it kindly, has been one of failure. In fact, EVERY fiat currency since the Romans first began the practice in the first century has ended in devaluation and eventual collapse, of not only the currency, but of the economy that housed the fiat currency as well....please those of slow learning (thats you sparky re-read till you get it)

And now for some examples of non-fiat currencies that have survived....?

[percy]

[QUOTE=Skol;376569]1.

I've heard the rain isn't falling in India, less rain means less crops, means less gold sales.

Bangladesh Floods means it is pouring down.