Gary’s Note:
Does the gold price seem a little too high to you? Don’t worry about says
Jeff Clark. There’s still a very long way for gold to go. And Jeff has a way
for you to get on board.
|
Why Gold Has a LONG Way to Go |
By Jeff Clark
November 6, 2009
Stowe, Vermont, U.S.A.
A couple weeks
ago, I had my TV tuned to a business show that loves to give predictions on
the markets and the economy. On that day, one of the program’s regular
guests declared it was time to “short” gold, that it had reached its top,
and that the precious metals bull market was over. I’ll try to be nice in my
rebuttal.
So, what was his
reasoning: Technical analysis of wave counts? Falling demand? A telling
ratio? Sun spots? No, he noted that upscale department store Harrods in
London began selling gold bullion and coins “over the counter,” ergo, the
top was in. Nice try, “Bert,” but this is amateurish. You really shouldn’t
be playing with the big boys if that’s the basis of your call.
Yes, gold will
someday put in a top, and since the gold price is largely determined by
psychology, the end of the bull run will be marked by behavioral types of
signals. But calling a top in gold now is like declaring that WWII was over
because the Allies won a small skirmish in early 1942. To have made such a
statement, based on a small, isolated event, ignored the greater forces that
had yet to play out and would have made any journalist or military
strategist look foolish indeed.
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And here’s why
Bert looks equally silly today…
If the top were
in, we’d be in the midst of an all-out Mania. Are we? Do you get the
impression there’s a rush into gold by the greater public right now? Are
headlines blazing the covers of major magazines pronouncing gold as the new
investment king? Has Wall Street gone gaga over gold and silver? I ask
because these are the true signs that a trend has entered its final blow-off
top and would signal it’s time to get out.
I decided to put
Bert’s prognostication to the test, and I invite you to play along.
First, I struck
up casual conversations with my friends, neighbors, relatives,
acquaintances, my wife’s co-workers — heck, even my seatmates on airplanes —
angling to learn how much gold they were hoarding, about the killing they
were making in gold stocks, and how they were getting rich from all their
precious metal investments. (In fairness, I had to exclude my dad, who is an
award-winning gold panner, but he’s the only one.)
I found no one —
not one person — who is actively investing in anything gold or
silver, let alone rushing to buy or hoard the stuff. I had two people who
confided that they did own gold, but in both cases it was inherited. A few
were curious how they would go about doing such a thing, and fewer asked if
I thought they should. Most everyone looked at me blankly when I asked; they
didn’t seem to know what I was talking about. When I got a reaction like
that, it was pointless to ask about gold stocks. Of the handful I did ask,
most had never heard of Barrick Gold, the world’s largest gold producer.
Now ask yourself
the same thing: how many of your family, friends, neighbors, and co-workers
are buying gold and silver coins? Are any of them giving you hot stock tips
about a fantastic gold producer, or telling you about the latest gold
discovery made by a company in China? Have any fellow investors told you
they’re dumping their brokers because they can select gold stocks better on
their own? Anyone telling you they’re going to night school to learn the
gold mining business?
Next, I surveyed
a large sampling of print media looking for some of these signals that Bert
surely had spotted. Over the past couple weeks, not one of the major
business magazines I reviewed had anything on the cover about gold or
silver. Further, there were no articles on precious metals, such as the best
ways to buy or store all this gold everyone is buying.
One magazine ran
an article about ways to prepare for inflation, and gold wasn’t even
mentioned! I did see an ad from the U.S. Mint in another, along with a
couple small ads in the back that said they had the best prices on bullion
(right beside the teasers for buying a Russian wife), but that was it. Even
the portfolio allocation models recommended in the articles I read made no
specific mention of precious metals (one recommended a “resource” fund, but
their discussion of it was centered around energy investments).
Other than the
articles you seek out, how many mainstream magazines do you see extolling
the virtues of gold and silver on their cover? How many bestsellers are
prominently displayed at your nearest bookstore that scream at you to buy
gold stocks? Are you getting fed up with all the junk mail you get about
gold and silver?
Last, I went out
of my way to look for stories on gold and silver on TV and radio. About all
I could find were the same ads that popped up after last year’s Super Bowl
commercial by Cash4Gold. A couple programs quote metals prices, and I was
able to find another that actually used the word “gold” in a sentence. It
might just be me, Bert, but I can’t find any news anchors talking about the
latest gold discovery or that “must own” gold stock. No in-depth special
reports from investigative journalists on the hot Canadian junior mining
sector. Nothing on my radio about the best ways to store all the silver
every smart investor has been buying.
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How about you —
are you feeling bombarded by TV and radio ads and segments on precious
metals? Do you have the clear impression gold and silver are the hot new
investing trend around the world? Are you Tivo-ing certain TV shows because
of all the great info they provide about picking the next great gold stock?
If we were in a
Mania, Bert, all of this would be happening. But it’s not. Those who buy
gold coins in the U.S. are still largely viewed as members of a fringe
group. There is no public discussion on gold, no insider tips on the latest
hot gold stock, no special reports on how to store all the bullion you’ve
collected. The psychology isn’t on our side yet. One signal does not a Mania
make.
Last and perhaps
most important, Bert, are you sure the dollar is done falling?
You’re absolutely convinced we won’t see price inflation? Our current debt
load won’t pose any future problems? No more worries about foreigners buying
all that debt? Obama and Bernanke really have saved the day?
Bert, send me
your shorted gold positions, I’ll buy them from you. And although the gold
price could see a correction in the near term, and several more along its
journey to “the top,” remember that battle in early1942 and all that had yet
to occur before the war was over.
And one more
thing: when you finally become breathless to buy gold stocks, I just might
be ready to sell them to you.
Regards,
Jeff Clark
Casey Research
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We’re going to
be looking at some of the longer letters about the urban farming article in
tomorrow’s weekend edition.
Today, let’s
look at a letter from someone who won’t have this little black duck to kick
around anymore…
How the hell can
you get concrete and pavement out of the way in order to have “Green
Acres”? Sure, the land is fertile, but the cost to remove the urban rubble
is beyond imaginable expense. An idiot can tell you it ain’t worth it. If
you planted a crop where the land was transformed, the local “poor me”
bastards would move in and steal anything they could find because “We’ve
been oppressed for 400 years and we deserve it!” What’s the point, with
porch-bunny thieves at mid-night laughing at your efforts? Your article is
fantasy (are you on crack) or just plain stupid.
Yeesh.
And in the same
vein…
Sorry, but
Detroit doesn’t have a future. Lump these two in this article in with
Bono. These are not very bright people who hope and believe while they are
rejecting reality.
If anyone wants to see the future of Detroit they should go to Haiti,
Africa, Jamaica, the Bronx, or any of the many places that provide the
empirical evidence to support the lack of a future for Detroit. The
evidence is everywhere, even South Central L.A., Pontiac, Michigan,
Cleveland, Atlanta.
Everywhere there is a majority Black population there is no
self-sufficiency, no willing labor force, or any of the other ingredients
needed for progress.
The entire Black population of the world is a dependent population. There
are many very bright, good and successful Black people, but those are the
ones who have forsaken Black African “culture.”
Africa was called the Dark Continent over a hundred years ago. Today, if
the truth were permitted to be told, it is just as dark as it was in the
19th Century.
Look at what has happened to South Africa since it has been turned over to
majority control. Crime and poverty are rampant. The stock exchange had to
leave Johannesburg because it was not safe.
Crime is rampant in every majority Black population in the world, which
makes these areas immune to progress.
What do the two in the article think made Detroit what it is today? News
Flash: it was not the demise of the auto industry.
[Personal
anecdote about personal experience doing business in Detroit omitted for
length—ed.]
There is no future for Detroit unless the population is exported and
replaced by a self-sufficient working population of Asians. And if the
trend wherein over one hundred American cities have been looted and burned
by their Black populations in the last 100 yearsand people continue to be
beaten to death with two by fours, set on fire in the streets and gang
raped in their school yards there is no future for any American city.
I have lived in Europe where I could safely walk throughout almost any
city when I was not able to walk safely in my own neighborhood at night in
the U.S. There was only one obvious reason for this.
If anyone wants to disagree with this they will be stymied by history and
empirical evidence unless they are from among the many who just choose to
believe what they choose to believe, ignoring reality.
As my old WWII vet Black 1st Sergeant used to tell us: “First, you got to
recognize you have a problem, but then you got to recognize what the
problem is before you can solve it.”
Thanks to political correctness, the major problem plaguing Detroit and
other large American cities will never be solved, the future of America’s
Black population will continue to become bleaker and bleaker, and this
will continue to adversely affect the entire country.
Sorry, but these are the facts. And as long as people like the two
planning the bright future for Detroit contingent on its currently
available work force refuse to recognize them there will never be a bright
future.
It’s like I
always say…if you want your city to be dynamic and productive, import a few
Asians and Jews.
If you’d like to
read more on the bearing of race in Detroit’s urban farming,
just click here.
And if you’d
like to read some more of the letters sent to the Whiskey Bar on
this topic, just tune in tomorrow for the weekend edition.
Regards,
Gary Gibson
Managing Editor,
Whiskey & Gunpowder
