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5.1.2016 - Financial Intelligence Report Bookmark

Gold, Silver, the Vegas Play, and More

Today’s letter is going to take a bit of a twist from our regular Sunday letters.  Not long ago I mentioned our “Vegas Play” in one of the free newsletters, and it caused a lot of buzz.  When you send out a letter that goes to tens of thousands of folks, you will get praise mail, hate mail and everything in between. Well, I got push back from some saying I was just sensationalizing a lucky play to drum up more subscribers. So with that in mind, I want to do a bit of history searching, and see if that’s really what I was doing.

I have been a precious metals bull in Gold since 2000. I pounded the table on it, and even said in one particular newsletter that “I think we’ll see gold at 1000 dollars an ounce within ten years”.  At the time I wrote that, gold was 295 dollars an ounce. I was soundly mocked and laughed at as a lunatic.  As Gold rose higher and higher I continued to tell folks that I was still buying it and it still looked great.
I was late to the silver party however, for two reasons, one good…the other ridiculous but real. One was that Silver was not considered too much of a money like gold was/is, but secondly, NO countries stock piled silver as a portion of their reserves. As much as gold is shunned by the Wall Street Crowd, every sovereign nation keeps a significant “tonnage” of the stuff as part of their nations “wealth reserves”.  So my feeling was that nations would shun dollars and yen and what have you and try and accumulate gold, reducing supply and increasing the price. So gold was the winner in my mind, and silver wasn’t making it in my equation.

The other reason and yes this is incredibly tacky, is because I was a jeweler for years, and frankly I hated working on silver jewelry. Back when I was a jeweler silver was about 5  dollars an ounce. Someone would come in the store with a ring they bought for 3 bucks, and ask me to size it or fix it…and what could I charge? I always felt horrible charging more for the repair than the ring/bracelet/pendant actually cost them. So silver wasn’t in my deep favor for years.

Well, while gold did indeed go from under 300 in 2000 to a high of 1900 the ounce in 2011, Silver didn’t get in gear nearly as early. In fact, I didn’t start considering it until about 2006.  At that time silver was flirting with the 7 – 8 dollar range. But soon after, I started getting very bullish on it. The more I did the math, the more I studied the uses, the more I liked it.

Silver “caught the fever” in about 2009 and by 2011 had hit 48 dollars the ounce. Soaring from 10 to 48 in a couple years, it seemed destined to reach what I thought ( and still think) is a possible top in the 70 – 80 dollar area. But instead, in what can only be described as one of the most blatant “in your face” manipulations, Gold and silver were both beaten unmercifully in the paper “futures” market. Despite demand so strong the mint was continually running out of the stuff, the price just kept falling and falling.

Quick, tell me any other commodity on Earth, where demand is so high that the mint, which is legally bound to produce all the silver coins that the public demands, runs out…yet the prices fall. Go ahead, I’ll wait. You won’t find it. And this is NOT just a US centric situation. In 2014 India increased its silver import demand to the point where in just 10 months, they sucked up 160 million ounces out of London, drawing stockpiles so low they had to continue buying from Russia and China.

So as you can see, history clearly shows that over the years, I have been a staunch believer in the metals, and if I wanted to sensationalize something, how about screaming “Investyourself claims gold will go from 295 to 1000 in ten years… and it did!!!”   

Jim Rickards wasn’t a household name in 2000. Half of the so called “guru’s” today didn’t even exist in 2000. Recently Rickards;  through the power of great promotion, has hit the big time with his books Currency wars, and now the “new case for gold”.  Maybe I should have invested in promotion all those years ago, because the late Bob Chapman Of the International Forecaster and I were having conversations about the upcoming currency wars we saw developing back in 2001 and 2002. Rickards book didn’t hit the market until 2007. Go figure.

The new case for gold is a good book and I recommend it. He’s a bright guy and includes angles in the book that even a conspiracy nut like me hadn’t thought of. But the bottom line between him and I are the same. Digital entries in a computer aren’t money. Money shouldn’t disappear with the flick of a switch. Gold has been the worlds “money” for thousands of years. Moving forward, the world is once again going to revert back to some form of loose gold standard, as it is now evident that “fiat” currency always fails. Gold is going to go higher. While he says gold could hit 10K dollars, I’ve never gone that far, my biggest estimates were for it to settle in between 2600 and 3600.  

What about timing?  Let’s chat about that.  I have two products. A free newsletter that you’re reading right now, and a pay for members area we call the Insiders Club. The following is part of our 10:40 update from February 16th.  2016

10:40

Let's talk metal.

So, after all these years, why do I think it is now time for them to start another long term run?  There's many reasons, but the most obvious are the one's we've been talking about lately. First off, China was accepted into the IMF SDR basket. So while China will continue to amass gold, the wink and nod "deal" they had to get their gold on the cheap is over. Next the push for negative interest rates and a cashless society. Would you rather own a gold coin that just "sits there" or put 1000 dollars in the bank, and then PAY the bank a percent to hold it??? I'll take the gold thank you.  Last week the ECB voted to do away with the 500 Euro note. Now we're hearing US pundits call for the end of the 100 dollar bill here in the states. They want you out of cash and into their digital world where they can reach in and take your money. They don't want you holding 100 dollar bills under your mattress.  That makes me want to own some metal.

Of course the specter of war looms virtually every day as the Middle East is probably only weeks away from even more escalation.  If Turkey and Saudi "cross the line" figuring NATO will stand behind them, we very well may see Russia respond with tactical nukes in the area. Times are dangerous folks.

This is why we see recent reports of folks lining up for BLOCKS in London trying to buy bullion. This is why some of the bigger hedge funds have been moving away from stocks and increasing their metals portfolio's.

I am not expecting a rocket ride higher in the metals. I am however expecting that when it's all said and done, Gold will be north of 2600and silver over 70. I still believe that.

So, how do you play it?  FIRST and most important is this...get some physical gold and physical silver.  Remember this... in a world where the rule of law is breaking down daily, the only thing you truly own is what you can lay on top of with a gun in your hand to protect it. Yeah you might have some digital statement on your phone that says you own money in the bank, or a gold ETF...but do you really? You only own it if the system continues to function.  Think of it like this... you might have money in the bank. But remember that day you tried to get some out and the ATM was down?  What if they all were? What if your bank suddenly shut it's doors?  Do you really own that money? At that instant the answer is "not really"

Once you have some physical, the next step is trying to "invest" in the miners that will survive. There's many ways to do that.

The GDX  is an ETF of the "bigger" miners. The GDXJ is an ETF of junior miners ( smaller cap companies)  They present an easy way to get exposure without having to find the couple lucky stocks that happen to go up.  

But there's another one that you might wish to consider too. The Sprott God miners ETF.  The symbol is SGDM. It tracks the Sprott Zacks Gold Miners Index, which is rules-based and rebalanced quarterly. The Gold Miners Index seeks to identify about 25 gold stocks with the highest historical beta to the gold price. The weighting also depends on quarterly revenue growth year over year and balance sheet quality (long-term debt to equity).

Obviously there's a tremendous amount of small miners that have the ability to really do well if gold and silver continue higher. Unfortunately some of the best however are located in Canada and only trade on the Canadian exchanges.  One that comes to mind is Lakeshore gold. I like their properties, I like their balance sheet. But it is only traded on the TSX exchange.

Names you are probably familiar with are NEM, ABX, GFI, GG, PAAS, AG, AUY, RGLD, FNV, IAG, EGO, HL, MUX, BVN, etc....

All of them should be considerably higher over the coming years.

As you all know we have an options play working with AG, and we own a little tiny mining land acquiring company FFMGF.  We are going to want to add to that.


On Feb 16th, the GDX was 16 dollars. It closed Friday at 25.  A 56% gain.  GDXJ was 22. It closed Friday at 38.  A 72% gain.  SGDM was 16. It closed Friday at 23.  A 43% gain. NEM was 24, it closed at 35.  Shall I go on? Nah, you get it.

If I wanted to sensationalize, I could take every one of those stocks listed and scream about it on Facebook and twitter. I don’t.   Our little FFMGF which we bought at 31 cents hit 60 cents Friday. 99% gainer. I didn’t flood the world with our good fortune about it.

Bottom line? I like gold, I like silver, I like the miners. I think we’re in a monetary “end game” and tremendous shocks to the economic system are heading our way. They won’t go straight up, pullbacks will happen. The elitist scumbags that hate gold and silver will continue to try and beat it down. But in the long run? I’d rather have 10 silver eagles in my hand, than 500 digital dollars at some bank that now considers my deposit to be “an unsecured loan to the institution”.  Dollars that they can say “no longer exist, sorry”.

The Market…

Friday afternoon you were witness to “magic” once again. After opening soggy and dipping even lower during the session, at one point seeing the DOW down 155 and the S&P down 20….the late afternoon saw another “Friday rally”.

Here’s another excerpt from our Insiders Club that I wrote Friday ahead of the open:

Friday's are strange beasts. In years past, Friday's were often poor as no one wanted to hold over the weekend. But in the last couple years, Friday's have become darlings of the market, so they can close out the week with a green day and then spend the weekend on Financial shows pointing to the green arrows. So even if today is nicely green, it really doesn't tell us anything. It "could" be an honest "buy the dip" or it could be "made for TV" baloney.  Monday will be much more telling.

Then another at 10:40 after watching them take the DOW from -125 to – just 70…

Folks, it's Friday. They like a green close on Friday. They are going to print up more funny money and do all they can to keep the forces of mother nature from dragging this market lower. They might not succeed, but they are certainly trying for all their worth.

Well try  they did. As late as 2:30 the DOW was down 136 and the S&P down 19. Then “it” happened. Up and up we went. By 3:20 the DOW was only down 22, and pushing for green. It failed in the last moments, but it was undeniable. They wanted a green close for the weekend.

They needed to halt the slide at 2050 or all hell would break loose. We hit 2052 and they turned on the algo-bots which bought up everything. We ended the day at 2065.  They will defend that 2050 with gold plated kitchen sinks and platinum commodes.

But the market feels weak. It feels heavy. Internal indicators are rolling over. Money is still fleeing the market. The Central banks are going to have to go into full frenzy mode to keep this thing from rolling over. The old adage is “sell in May and go away”. They will not want that to happen, and they’ll rely on the buy back embargo ending to help their case.

Most companies have not been able to do stock buy backs, because there’s a black out period around earnings season. That will end around May 4th for most. We are going to see spectacular buy backs occur, as companies have sold debt to raise cash to do it. Volatility is going to increase to wicked levels. Be careful out there.






 
 






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