We’d all love to bet the ranch on a sure thing, and who among has too much wealth set aside for their golden years?
Because of the runaway government spending/deficits, as well as a plethora of unfunded liabilities from Social Security to Medicare, to the Pension Guarantee fund, and so much more… and now the FED starting new rounds of QE, gold must necessarily go up in the near future. Conservatively to $2,300 – $2,500 per ounce. And all the sovereign powers that matter in the world are building their gold reserves so that they won’t be short stacked when everyone comes to the table for a new international monetary agreement.
Many people predict that gold will go to $5,000 per ounce and even as high as $10,000 per ounce (and higher).
We can believe in this or not. The powers-that-be have been very good at kicking the can down the road so far.
My crystal ball is just as opaque and everyone else’s, but the dramatic rise in the USD price of gold seems to me to be a matter of when, not if. If gold breaks out to new all time highs above $2,000, people are going to get gold fever and the price should skyrocket.
And if that is true, then the real investment opportunity is in silver. Silver has a historical record at out-performing gold in strong rallies, and silver is also known as “the poor man’s gold.” The way I like to see it is that gold is the money/wealth of nations, and silver is the money of the people.
But the opportunity is laced with problems, and that’s why I’m writing in.
The first problem is the COMEX, referred to by many as the CRIMEX. No thinking person would dispute the worldwide price of physical gold and silver are set by the paper price as printed at the COMEX. Recent headlines have confirmed the long alleged market manipulations in gold and silver. It’s been a criminal enterprise for many years. The large banks/market manipulators rake in tens (if not hundreds) of millions of dollars at every market turn, and it’s business as usual and they’ll pay the occasional fine if they get caught.
This criminal enterprise has been key to keeping the price of gold and silver artificially low for many years. And when the time comes that prices are going to skyrocket, the insiders are going to be long–not short. We need to see this coming. But how? There is already widespread rumors that JP Morgan bank has untold hundreds of millions of ounces in physical silver. A rumor isn’t worth much, but if any entity in the world knows the future prices of gold and silver, it’s going to be JP Morgan.
The next part of the puzzle revolves around the ratio of silver to gold. The ratio is currently at 85|1. If we use recent history as a guide, the last time gold made a significant rally to new all time highs, the silver ratio closed to about 32|1. Maybe this won’t happen again, but at least the math is easy. If gold rallies to $2,500, then silver might rally to $78.
But human nature being what it is with all the fear and greed, if silver posts new all time highs and gets up into the range of $78, everyone with an opinion is going to be looking for silver to break $100 (and I suspect it will). In fact, I’ve been following the silver market for 18 years now, and I’ve heard recent estimates as high as $140 to $200. Neither would surprise me, but just to carry the conversation forward, let’s say that our prediction is for silver to go to $120 per ounce. Let’s further say in the next three to five years.
If I can buy silver now at $17 and it only goes to $78, I’m not going to complain.
But deep in my heart, I’m looking at this as a ten-bagger (or close enough). I bought physical silver as low as $4.28 per ounce and sold it as high as $44 per ounce. So I know how the ten-bagger feels. But that was physical silver and there was no leverage.
This time around, I’d like to leverage the same kind of gains by a factor of three times to five times or more (and did I mention bet the ranch?). I believe all of this is very possible–but I don’t know the best way to do it.
Buying physical won’t cut it, and top-tier mining companies will only go so far.
That seems to leave ETFs. But ETFs pose at least two problems of their own. One, they are not meant to be long term buy and hold instruments. They are meant for short-term trades. Two, many if not most are subject to counter-party default in the case of parties who bet big on the wrong side of the market.
There are managed gold and silver investment funds… but I do not know of any that are planning to optimize the coming rally for maximum growth and profits for the benefit of the shareholders. Not to mention that they take a big chunk of the profits for themselves (which they earned). I’ve not done an exhaustive search of such funds, but a few that come to mind at least in terms of people I know and trust would be Rick Rule (Sprott), and Peter Schiff (Euro-Pacific Capital). But if you’re not a “high net worth individual” you may not make it into the berry patch where even the clients have yachts and the streets are paved with gold.
I’d rather manage my own investments and keep all the profits for myself (especially since I’m following the markets/news anyway).
On a short-term basis (a few weeks to a few months) I can select the best investment vehicles to make great returns (e.g., GDX). But for an open-ended three to five year plan, I don’t know the best way to build the silver and gold portfolio. That’s why I’m writing in.
I want to maximize the profit potential, but I don’t want to gamble or take risks of defaults/fraud. I want to be smart, but not greedy or stupid.
I’ve had many years to see this rally coming, and when it’s all over, I’d like to be able to look back and believe that I made the best of it.
It’s been well said that 90% of the move comes in the last 10% of the time. The proverbial hockey stick. I believe we will see this in the silver market, but if we expect to get paid, it’s important to know who is taking the other side of our trades.
As we consider the options, there is probably a best time to have our money in ETFs, and a best time to have our money in major mining stocks, and then the best time to be in the junior mining stocks.
If anyone can process this information, and come up with helpful useful recommendations, I would be grateful.
Thanks for reading.
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