Apr 10

What’s Going on With Gold Recently?

Posted by Kristjan Velbri | Posted in Gold, Silver | Posted on 10-04-2010

There’s been a lot of misinformation spread about gold via the internet in the recent two weeks. Eric King of King World News seems to have stepped way over the line by presenting very dubious, and I would say, blatantly misleading information about the recent CFTC hearings. I have great respect for Mr. King for his efforts in trying to bring on guests that think clearly and don’t give you the bull that you can read in and see in mainstream financial media, but I can’t agree with everything that he and his guests say. Up to this point the amount of biased information coming from guests on his shows has been somewhat limited to a few outliers, but the last two weeks have been all about gold bugs (the paranoid folk who hate the recovery, love inflation and don’t want anything to do with real facts as they relate to financial markets).

I think that Mr. King puts too much trust into his gold bug guests, especially the ones from GATA. In fact I think they’ve got some kind of agenda on their own – they’ve been on this for years and they don’t seem to be running out of money. No sensible person would devote his life and career to fighting the gold market unless there was something in it for him or the people who are funding this. The only possible explanation for GATA’s involvement is their own financial gain, but I don’t understand the gold bugs with accounts in the mere thousands, there’s way too little for them in it if they somehow would be able to drive the price up a couple hundred bucks by tweeting and linking they gold bug nonsense. It seems that people are willing to lose every bit of skepticism they have for just a few hundred bucks (tech bubble/subprime bubble ring a bell?).

Here are the original interviews that are the basis of recent rumors, in the order of publication (don’t forget your inner skeptic behind when listening to these):
King World News interview with Andrew Maguire & Adrian Douglas
King World News interview with Gold Anti-Trust Action Committee (GATA)
King World News interview with Harvey Organ, Lenny Organ, Adrian Douglas

And here is an alternative, non gold bug view of the matter from two professionals:
Financial Sense Newshour 1st hour interview with Jeff Christian and Nick Barisheff, the show begins with the usual introduction (after all, it’s a weekly podcast), the interviews with gold experts start off at the 26th minute.

It may offer comfort to think that GATA is right when you are holding a long position in gold or gold related assets but at the end of the day, you have to keep a clear, skeptical mind. Don’t trust everything just because it supports your position. The gold bug bandwagon effect may turn out to have a net positive effect on your portfolio, but believing every conspiracy story out there will most likely have a negative effect on your portfolio in the long run. Banks and fund managers don’t make money by relying on David Icke or Dan Brown for the latest market insight, they make money by making rational decision based on trustworthy information gleaned from trustworthy, verifiable sources.

Disclosure: Long SVM, SLW. Long physical gold and silver based on fundamentals (I do not hold positions based on alleged manipulation stories, nor should any other prudent investor).

Post to Twitter Post to Digg Post to Ping.fm Post to Reddit Post to StumbleUpon

Dec 06

Gold Investors, Stay Calm – Here’s Why

Posted by Kristjan Velbri | Posted in Gold, Silver | Posted on 06-12-2009

A letter to those savvy investors that are still holding on to their gold and gold mining shares,

I hope you’re not feeling too bad about this sharp correction gold had on Friday. It’s nothing to be afraid of – this is nothing personal. The markets are not personal and sooner or later we’ve all got to deal with it. Gold is in a long term bull and short term corrections like these should not be taken too seriously. For some who are more courageous, this will signal a buying opportunity. For people who can’t sleep well knowing their portfolio is temporarily in the red because they bought where others sold, this is a time to sit on one’s hands and do nothing.

Do you remember the bull run and the eventual bubble in tech stocks? Or this bubble? At first, the bull was also climbing a wall of worry just like gold is right now. There was widespread disbelief but eventually people got around and after a few years it all went manic. Gold is not in a mania phase yet, but it may test the launching pad (ie. $1000) level. I’m not too worried about that. In fact, I like it because I wouldn’t want to see gold going too parabolic. Assets that go up too sharply tend to snap back very fast. If you take a look at previous bull runs that ended in a bubble (like gold will in a few years’ time, but we are far from that right now), then you will see that investors who get shaken out near the launching pad will miss the big moves. You need to ask yourself whether you are in gold and silver stocks for short term gains or for the whole marathon.

If a decline like we had on Friday makes you nervous then I have to warn you – this is just the beginning. When gold reaches new highs, the volatility is going to increase significantly. $100-150 moves will become the norm.  The result will be that small, antsy, caffeine-laden day-traders will be shaken out of their positions. They will fall like leaves off a tree on an autumn day. One of the things that I’ve learned during this financial crisis thanks to the help of many great authors and newsletters is that bankers run the show by buying on the dips. In effect, this is the transfer of stock positions from weak hands to strong hands. Don’t be the weak hand. This is not some” think positive” type of bullshit. I wouldn’t be telling you to be the strong hand if I didn’t know the fundamentals behind gold’s rise (and the dollar’s subsequent demise). Being the strong hand when it comes to the dollar is bullshit because the fundamentals are very bleak. Being the strong hand when it comes to gold is the only way to win this game. You’ve got to acknowledge that bankers still run the game and there is nothing you can do about it. The only way to play this is to ignore the short term dips until the fundamentals and the technicals signal a selling point.

This year another strong fundamental driver has been added to the mix – central bankers have become net buyers of gold and there is nothing Ben can do about it. The fact is that central bankers are printing away our purchasing power. This is not a phenomenon that is unique to the United States. Nobody wants their currency to strengthen in an environment like this so the central bankers just keep depreciating their respective currencies. The only way you can protect your wealth is by buying hard assets, the best of which are gold and silver, because they will not only protect your wealth but they will also gain in value since gold and silver are in a bull market. Have been for quite some time. And there’s no end in sight just yet. So hold on to your metals and keep accumulating.

I don’t know how gold will do next week. The dollar had been setting up for a rally for quite some time now. This might hamper gold’s rise. Or not. But it really doesn’t matter. If you are convinced about gold’s superiority to all the other asset classes then you really shouldn’t worry.

Post to Twitter Post to Digg Post to Ping.fm Post to Reddit Post to StumbleUpon

Nov 01

Real Life Example of Inflation

Posted by Kristjan Velbri | Posted in Gold, Silver, Video | Posted on 01-11-2009

This is one of the best videos I’ve ever seen on inflation/loss of purchasing power. Enjoy (the intro music might be a bit loud so turn the volume lower before you start viewing).

Post to Twitter Post to Digg Post to Ping.fm Post to Reddit Post to StumbleUpon

Oct 14

Junior Miners’ ETF Out Soon

Posted by Kristjan Velbri | Posted in Gold, Silver | Posted on 14-10-2009

Amidst all the market folly and Fedtalk, every once in a while, some good news creep up. I am delighted to announce that the constituent list of Junior Gold Miners is now public (original source). This is extremely good news as during the previous bull market in gold back in 1970s it was the juniors that made the largest percentage gains. We have had a nice rally in gold since 2001, but the bull market is far from over. Prepare yourself for the parabolic curve around the corner.

The junior gold market is a very lucrative, yet risky market and many investors shy away from it due to the risks. With the creation of this new ETF, the risk is much smaller than one would have buying individual stocks. The returns are smaller as well, of course. But this is really not that important as the creation of this new ETF will bring new capital to the junior miners, which will in turn generate more interest in those companies. The best strategy would be to take a look at the corporate presentations and balance sheets of the companies listed below to determine the best opportunities and then buy them before the ETF hits the market. You’ve got anywhere from 1 to 2 months to do that. I’ve had a close look at some of the companies on the list and I can tell you that they are very undervalued right now.

Here’s the list (Hat tip Adam Brochert of Gold versus Paper):

Andean Resources Ltd (AND.TO)
Avoca Resources Ltd (AVO.AX)
Dominion Mining Ltd (DOM.AX)
Kingsgate Consolidated Ltd (KCN.AX)
Medusa Mining Ltd (MML.AX)
St Barbara Ltd (SBM.AX)
Alamos Gold Inc (AGI.TO)
Aurizon Mines Ltd (ARZ.TO)
Colossus Minerals Inc (CSI.TO)
Detour Gold Corp (DGC.TO)
European Goldfields Ltd (EGU.TO)
Fronteer Development Group Inc (FRG.A)
Gabriel Resources Ltd (GBU.TO)
Gammon Gold Inc (GRS.N)
Gold Wheaton Gold Corp (GLW.V)
Golden Star Resources Ltd (GSS.A)
Great Basin Gold Ltd (GBG.TO)
Jaguar Mining Inc (JAG.TO)
Kirkland Lake Gold Inc (KGI.TO)
Lake Shore Gold Corp (LSG.TO)
Minefinders Corp Ltd (MFN.A)
New Gold Inc (NGD.TO)
Northgate Minerals Corp (NXG.A)
NovaGold Resources Inc (NG.A)
Romarco Minerals Inc (R.V)
Rubicon Minerals Corp (RMX.TO)
San Gold Corp (SGR.V)
Semafo Inc (SMF.TO)
Silver Standard Resources Inc (SSRI.O)
Silvercorp Metals Inc (SVM.TO)
Ventana Gold Corp (VEN.TO)
Lingbao Gold Co Ltd (3330.HK)
Avocet Mining PLC (AVM.L)
Real Gold Mining Ltd (0246.HK)
Allied Nevada Gold Corp (ANV.A)
Coeur d Alene Mines Corp (CDE.N)
Hecla Mining Co (HL.N)
US Gold Corp (UXG.A)

Disclosure: me and/or my close relatives are long gold and silver bullion, long SVM, long MFN and considering to buy JAG and SSRI.

Post to Twitter Post to Digg Post to Ping.fm Post to Reddit Post to StumbleUpon

Oct 11

Will the Carry Trade Kill the US Dollar? Jim Willie Thinks Yes

Posted by Kristjan Velbri | Posted in Gold, Silver | Posted on 11-10-2009

UPDATE! LINK TO JIM WILLIE’S DOLLAR CARRY TRADE ARTICLE

Eric King, the host of King World News made an extremely powerful interview with Jim Willie. Among the topics that were discussed was the carry trade and how it will bring down the dollar. The US dollar is already under extreme strain but this will be the force to push the dollar off the cliff. This interview is a must listen and is so far one of the best interviews Eric King has made this year.

LINK TO INTERVIEW WITH JIM WILLIE

LINK TO DOLLAR CARRY TRADE ARTICLE: New Deadly Dollar Carry Trade

The interview is a part of a ongoing series titled the Systemic Failure Series. I strongly advise you to listen to the previous two interviews as soon as you are done listening to the carry trade interview.

The ongoing carry trade has already pushed gold and silver much higher. As more and more money moves into gold, there will be manic buying. China is also in on the game and to understand the effect China will have on gold, I advise you to read these two articles:
China Admits Gold’s Monetary Role
China Issued Covert Insurance on Gold and Silver

Don’t think that the countries of the world are going to watch silently as the dollar fades into oblivion, as is proper for a Banana Republic. There are already major forces at work as governments and central banks try to get rid of their dollar holdings. The fact that the US Treasury auctions have all failed over the last quarter is a case in point. If you are not already invested in real, physical gold, then now is the time.

Post to Twitter Post to Digg Post to Ping.fm Post to Reddit Post to StumbleUpon