Gold World News Flash |
- Gold Stocks HUI 2008 Blast from the Past
- In The News Today
- War In Ukraine & A Global Financial System Meltdown
- Who Gets Thrown Under The Bus In The Next Financial Crisis?
- The History of Gold & Silver Clearly Tells Us Where It is Heading in the Future
- Gold and Stock Update
- Gold miners see output falling short of expectations
- Don’t overestimate Ukraine’s influence on gold!
- Election implications for India’s gold price
- Namibia seeks stake in Navachab gold mine
- US Mint gold coin sales drop 60% in February
- The Biggest Component Of CPI - Rent - Is Now The Highest Since 2008: What Does This Mean For Broad Inflation?
- Bill Holter: You've been warned
- Bank Runs Coming to America -- Eric Sprott
- What 10-Baggers Look Like—and 100-Baggers
- My Favorite Silver Stock is Already Up 70%… And it’s Just Getting Started
- Gold Prices Jump as Russia Vows to Stay in Ukraine, Stockmarkets Slump, China's Trading Volume Hits 3-Month High
- Gold Prices Jump as Russia Vows to Stay in Ukraine, Stockmarkets Slump, China's Trading Volume Hits 3-Month High
- Gold Prices Jump as Russia Vows to Stay in Ukraine, Stockmarkets Slump, China's Trading Volume Hits 3-Month High
- Monday Morning Links
- Memo To Putin – To Punish You, We Will Pay More For Oil, Gas And Gold
- Gold price in a range of currencies since December 1978 XLS version
- Gold Bear Forecasts $500 Price Plunge Even as Gold Prices Climb
- Michael Ballanger: Junior Miners Rising from the Ashes
- Michael Ballanger: Junior Miners Rising from the Ashes
- London Gold Price Fix Is Manipulated Although Evidence Exists For Many Years
- GOLD Price Bearish Reversal
- In The News Today
| Gold Stocks HUI 2008 Blast from the Past Posted: 03 Mar 2014 10:30 AM PST Below is a chart of the HUI H&S top that I was showing on another website , during its formation in 2008 and the crash that followed. Keep in mind the HUI had been rallying for 8 years without a topping formation so when I started to show the possibility of this H&S top nobody wanted to hear it. Some of you know the feeling, that when you post something negative about the precious metals complex, you have to take a lot of flack to make your point. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 03 Mar 2014 10:05 AM PST Jim Sinclair’s Commentary The vanishing FT gold manipulation article You’ve Been Warned by Bill Holter for Miles Franklyn Over just the last couple of weeks we have seen several mainstream media headlines about "gold manipulation". The Financial Times as you know did an article that was promptly "pulled" as it was called a "mistake". All... Read more » The post In The News Today appeared first on Jim Sinclair's Mineset. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| War In Ukraine & A Global Financial System Meltdown Posted: 03 Mar 2014 10:00 AM PST from KingWorldNews:
The move in commodities is noteworthy. The Fed has made it a policy objective to foster an annualized 2% growth in the "inflation rate" as defined by a rise in prices. To be clear, we are not in the camp that believes that the CPI is an accurate measure of prices, and we certainly don't believe that prices are the measure of inflation. Inflation is a monetary phenomenon that relates to an over-expanding supply of money. Price increases are largely a manifestation of that inflation, not the cause. Sadly, the dictionary definition of inflation was even changed 10 years ago to a rise in prices to foster the narrative that rising prices are equivalent to inflation. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Who Gets Thrown Under The Bus In The Next Financial Crisis? Posted: 03 Mar 2014 09:46 AM PST Submitted by Charles Hugh-Smith of OfTwoMinds blog, The speculative excesses and political power of Wall Street pose a strategic threat to the Deep State, and as a result a showdown between the Deep State and the surface machinery of governance that has been captured by Wall Street is looming. The basic idea of the Deep State is that the visible machinery of governance--electoral politics and the Federal Reserve--doesn't set strategic policy, it ratifies and implements decisions made behind closed doors. In Mike Lofgren's definition, the Deep State is "effectively able to govern the United States without reference to the consent of the governed as expressed through the formal political process." In my analysis, the Deep State is the National Security State which enables a vast Imperial structure that incorporates hard and soft power--military, diplomatic, intelligence, finance, commercial, energy, media, higher education--in a system of global domination and influence. The Dollar and the Deep State (February 24, 2014) Ukraine: A Deep State Analysis (February 27, 2014) Like any other bureaucracy, the Deep State is prone to group-think, the tendency to join the prevailing "herd" in accepting a dominant paradigm and narrative that identifies key dynamics and sets priorities. Group-think responds to both success and failure. In the case of the Deep State, key elements of the neo-conservative paradigm have been discredited. The Rise and Fall of the Failed-State Paradigm: Requiem for a Decade of Distraction (Foreign Affairs) (Anyone seeking a public reflection of the current thinking within the Deep State would do well to read Foreign Affairs, with an emphasis on reading between the lines.) For the sake of argument, let's assume the leaders of the U.S. Deep State are not complete morons. Granted, that is quite a stretch, given that these are the people who gambled the lives of thousands of American troops and trillions of dollars in treasure on discretionary wars in Iraq and Afghanistan. But it is also reasonable to assume that the neo-conservatives who naively assumed that residents of Baghdad would not only welcome their foreign liberators with baskets of flowers but would magically reconstruct the social institutions that had been systemically destroyed by Saddam over the previous 30 years--yes, those neo-con nincompoops-- have been quietly put to pasture on their mini-estates in Northern Virginia. In other words, it is reasonable to assume that the Deep State has accepted that "mistakes were made" and flushed those responsible for the previous decade's disasters. The Deep State undoubtedly has its own niceties and protocols, but it is by necessity ruthlessly Darwinian: failure is not only always an option, it is inevitable as a systems-level consequence of tightly connected, interactive complex systems; such failures are known as "normal accidents," catastrophes resulting from seemingly small miscalculations and miscues that cascade into systemic crises. As a result, incompetence cannot be rewarded lest the Deep State itself suffer the consequences. The Deep State's prime directive is to preserve the Deep State itself and the nation it depends on for its survival. My analysis starts by identifying the vectors of dependency. (To the best of my knowledge, I am the first to use this term in this context.) The Deep State depends on the survival of the U.S. nation-state, but the nation-state does not depend on the Deep State for its survival, despite the certainty within the Deep State that "we are the only thing keeping this thing together." Strategy is one thing, responding to crisis is another. The surface government (elected officials, regulatory agencies, the Federal Reserve, etc.) responds to crisis in two basic ways: it chooses whatever short-term politically expedient fix reduces the immediate political pain (also known as "kicking the can down the road") and it sacrifices the interests of politically weak groups to protect its cronies and fiefdoms. This crisis-response triage requires that somebody gets thrown under the bus. In the 2008 financial crisis, the Fed threw savers and the bottom 95% under the bus to funnel hundreds of billions of dollars--what was previously paid in interest--to the banks to rebuild their broken balance sheets. The Fed also provided limitless liquidity to bank trading desks and financiers to skim billions from carry trades, effectively channeling the nation's financial resources to enrich its cronies, the top 1/10th of 1%. The Deep State must take a longer view, and make strategic triage decisions. All sorts of people, groups and policies are routinely tossed under the bus--foreign leaders, resistance groups, civil liberties, etc.--as the Deep State adjusts to long-term developments and crises with strategic consequences. Many Deep State decisions and policies are barely noticed, even though they are completely public. For example, the U.S. Deep State recognized that the dissolution of the Soviet Union opened an extremely dangerous door to nuclear weapons falling into non-state hands. So the U.S. spent tens of billions of dollars helping secure the thousands of Soviet nuclear weapons left in limbo after the breakup. Though the Deep State's institutional bias is to focus on conventional national security issues, it must also monitor potential strategic threats created by issues such as climate change, immigration and Peak Cheap Oil. The financial crisis was apparently an unexpected and unwelcome distraction from the geopolitical Great Game, and the response of the Deep State was muted. This crisis is simple to summarize: the paper claims on wealth so far exceed actual wealth that something's gotta give. These claims include trillions of dollars in shadow-banking bets (derivatives and other leveraged claims all teetering on a tiny base of real collateral) and trillions of dollars in debt-based claims on future income. Simply put, the vast majority of these claims will have to be zeroed out, i.e. these phantom-claim "assets" will be voided and declared worthless. This leads to the key question: who will the Deep State throw under the bus to preserve itself and the nation-state? Once again, identifying the vectors of dependency clarifies the strategic priorities. As I pointed out in The Dollar and the Deep State, the pre-eminence of both the Deep State and the U.S. nation-state depend on the U.S. dollar remaining the key reserve currency in the global economy. The collapse of the U.S. dollar would destroy the foundation of both the Deep State and the U.S. nation-state, hence my conclusion that the Deep State will not enable that collapse. As for all the financial claims on real wealth that will have to go to zero value, let's identify the operative vector of dependency with a question: which scenario most threatens the Deep State: 50 million hungry Americans taking to the streets shouting, "we're mad as hell and we're not going to take it any more!" or 10,000 financiers losing a couple trillion dollars in phantom wealth? In other words, the phantom financier claims of Wall Street now pose a strategic threat to the integrity of the U.S. and its Deep State. The Deep State needs a functioning U.S. nation-state, and a mass uprising arising from the collapse of the state cannot be suppressed with a few whiffs of grapeshot. The collapse of global pre-eminence and state financing of food stamps and other social welfare programs directly threaten the Deep State. The collapse of financier fortunes? While that would hurt some Yalie cronies, the Deep State is not Wall Street; it attracts those who prefer power to wealth and strategy to trading. I have no doubt whatsoever that the leadership of the Deep State would have no qualms about throwing bankers and financiers under the bus once they pose a strategic threat to the U.S. dollar and other financial interests vital to the Deep State, for example, keeping 300 million Americans distracted, placated and docile. It's certainly not lost on the Deep State that a palpable hatred of bankers, financiers and the Federal Reserve is taking root across the land. I know this is outside the mainstream, but I think it is increasingly likely that the financial system's skimmers and swindlers are being recognized as potential strategic threats to the Deep State. What is essential to the Deep State's survival and supremacy and what is not essential? Are 10,000 obscenely wealthy financiers essential? No. Between saving the U.S. dollar and making whole the $100 trillion in nominal-value bets made by financiers in offshore shadow-banking accounts--there's no contest. Conventional wisdom has it that Wall Street dominates the state and the Fed. To the degree that these formal surface institutions can be influenced by lobbying, campaign contributions and plum positions, this is true. But these surface institutions only ratify and implement Deep State directives. I know this sounds "impossible" within conventional narratives, but I am increasingly confident that the financiers' phantom claims on real wealth will be thrown under the bus in the next global financial crisis. Look at it this way: there's essentially nothing left to stripmine from the bottom 80%; most have been reduced to neofeudal debt-serfdom. Since the survival of the nation-state depends on the 80% remaining either passive or productive, the Deep State has a vital strategic interest in both the U.S. dollar and in maintaining the social welfare programs that enable the bottom 80%'s survival. The Three-and-a-Half Class Society (October 22, 2012) The Deep State also needs the top 20% to remain productive to maintain U.S. soft and hard power. Transferring trillions of dollars in real wealth to make good the claims of the financier class would require the stripmining of the whatever assets the top 20% still hold. This transfer would directly threaten both the nation-state and the Deep State. The dominance of Wall Street over the formal, visible machinery of governance has persuaded many that Wall Street is the Deep State. I believe this is a serious misread of the real Deep State. As I noted in The Dollar and the Deep State, to even discern the outlines of the Deep State requires a senior military position or national-security civilian equivalent. Those writing knowledgeably about Wall Street and finance typically show near-zero knowledge of high-echelon U.S. military and national-security assets, policies and networks, so this blind spot is understandable. It's widely assumed that Wall Street rules the roost in both the mainstream financial media and in the alternative financial blogosphere. In my view, the speculative excesses and political power of Wall Street pose a strategic threat to the Deep State, and as a result a showdown between the Deep State and the surface machinery of governance that has been captured by Wall Street is looming. Though everyone who is convinced the U.S. dollar will go to zero is confident that Wall Street will emerge victorious from the next financial crisis, I am convinced of the opposite: the Deep State will do whatever it takes to eliminate strategic threats to the integrity of the Deep State and the nation it depends on for its power and survival. In a financial crisis that threatens the dollar and the Deep State, the phantom claims of Wall Street's financier skimmers, scammers and swindlers will be tossed under the bus with few qualms. The triage might even be performed with a certain relish. Put another way: we've reached Peak Wall Street and it's all downhill from here. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The History of Gold & Silver Clearly Tells Us Where It is Heading in the Future Posted: 03 Mar 2014 09:30 AM PST from SmartKnowledgeU: studying the history of gold and silver clearly tells us where it is heading in the future. as well, looking at the ant-gold, anti-silver banker propaganda campaigns should prevent us from falling for the same dirty bag of tricks they are playing today. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 03 Mar 2014 09:00 AM PST by Jerry Robinson, FTM Daily:
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| Gold miners see output falling short of expectations Posted: 03 Mar 2014 08:59 AM PST Global gold output is poised to decline after the worst price slump in 30 years spurred producers to cut spending and revise mining plans. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Don’t overestimate Ukraine’s influence on gold! Posted: 03 Mar 2014 08:59 AM PST Apart from a short-term influence on gold, the tension in Ukraine will not become nearly as great a factor as Asian demand, says Julian Phillips. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Election implications for India’s gold price Posted: 03 Mar 2014 08:59 AM PST A new study reveals trend of Indian investors shifting again to gold as a safe haven, as prices have risen over 10% so far this year. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Namibia seeks stake in Navachab gold mine Posted: 03 Mar 2014 08:59 AM PST State-owned mining company, Epangelo Mining, is in talks with QKR to buy a stake in the Navachab mine it recently agreed to buy from AngloGold. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| US Mint gold coin sales drop 60% in February Posted: 03 Mar 2014 08:59 AM PST The mint sold 31,000 ounces of American Eagle gold bullion coins in February, compared with 80,500 ounces in the same month last year. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 03 Mar 2014 08:35 AM PST Even as the Fed laments that inflation as measured by either the hedonically adjusted CPI, or the PCE deflator measure (which on any given month is whatever a seasonal adjustment excel model says it is), is persistently below its long-term target of 2%, one component of the broader CPI basket has quietly continued risen to new multi-year highs. That would be the so-called owners' equivalent rent (OER), which is the biggest component of the CPI, and measures imputed costs of renting one's own home: it is currently the highest it has been since 2008. However, while it accounts for a whopping 23.9% of the CPI basket, OER has a far smaller share or 11.3% of the Fed's preferred inflation metric, the PCE deflator. Bank of America observes that over long periods of time OER and the rest of the CPI should tend to move together, reflecting overall inflation — that is, changes in the purchasing power of a dollar. However, in recent years that has been anything but the case, with OER now the highest since the Lehman crisis and rising ever higher even as the Non Shelter Core CPI continues to decline.
To be sure, the surge in rent prices to record highs is nothing new, and should be familiar to Zero Hedge readers. After all we presented just this a few short months ago:
Still, this divergence between rising rental inflation and disinflation in everything else has led Bank of America to ask whether as some analysts expect, an abrupt reversal in inflation is due with surprises to the upside. BofA cites said analysts who point to "special factors" that have either temporarily depressed inflation or are poised to jump higher very soon. Some of these stories have difficulty explaining why inflation has been so low for the past few years — those are rather persistent "temporary" factors. At this point BofA points out that while in the short-term the divergence between the series is indeed notable, over the longer-term the two datasets eventually converge:
What is Bank of America's conclusion about this
And there you have New Normal Paradox 101. In its attempt to reflate asset prices at all costs, and succeeding with both the stock market and new housing bubble if not so much wages and the broad economy, the Fed has made housing unaffordable for the vast majority of the population (confirmed further by the plunge to 15 year lows in mortgage applications), forcing Americans to scramble for rental housing, sending rents to all time highs. This can be is seen in the OER. The problem is that with so much of monthly discretionary spending going to rental, it means there is far less in free cash flow available to be used for other purchases. Which also means that inflation away from rents is declining and getting lower with every month almost as a result of the surge in rents! Continuing with Paradox 101: if indeed the Fed wants to stimulate broad inflation and boost the economy with a stable and achievable 2% inflationary target, it should pop the housing and rental bubbles, and send prices for this component of the CPI basket plunging, affording consumers more discretionary cash flow for other purchases. Sadly, the Fed, comprised of clueless economist PhD hacks, will never figure this out, and instead will ponder and wonder how it is possible that month after month even more broad deflation appears to be setting in. Of course, it only needs to look at the culprit - every period the incremental inflation is being eaten up by the monthly rental paycheck. Sadly, it won't, and certainly not before it is too late, and this too housing bubble bursts uncontrollably. By then, then there will be bigger fish to fry, than wondering where all the inflation has gone. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bill Holter: You've been warned Posted: 03 Mar 2014 08:33 AM PST 11:30a ET Monday, March 3, 2014 Dear Friend of GATA and Gold: Bill Holter, market analyst for LeMetropole Cafe and Miles Franklin Precious Metals Specialists, today muses about the sudden mentions in the mainstream financial news media about gold market manipulation. Holter figures that it's happening because the financial and journalistic elites know that the manipulation scheme is about to collapse and there's little point in concealing it anymore. His commentary is headlined "You've Been Warned" and it's posted at the Miles Franklin Internet site here: http://blog.milesfranklin.com/youve-been-warned CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Buy metals at GoldMoney and enjoy international storage GoldMoney was established in 2001 by James and Geoff Turk and is safeguarding more than $1.7 billion in metals and currencies. Buy gold, silver, platinum, and palladium from GoldMoney over the Internet and store them in vaults in Canada, Hong Kong, Singapore, Switzerland, and the United Kingdom, taking advantage of GoldMoney's low storage rates, among the most competitive in the industry. GoldMoney also offers delivery of 100-gram and 1-kilogram gold bars and 1-kilogram silver bars. To learn more, please visit: http://www.goldmoney.com/?gmrefcode=gata Join GATA here: Mines and Money Hong Kong http://www.minesandmoney.com/hongkong/ Canadian Investor Conference 2014 http://cambridgehouse.com/event/25/canadian-investor-conference-2014-inc... * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT How to profit with silver -- Future Money Trends is offering a special 16-page silver report with profiles of nine companies and technical analysis of their stock performance. Six of the companies have market capitalizations of less than $800 million and one company has a market cap of only $30 million. The most exciting of these companies will begin production in a few weeks and has a market cap of just $150 million. Half of all proceeds from the sale of this report will be donated to the Gold Anti-Trust Action Committee to support its efforts exposing manipulation and fraud in the gold and silver markets. To learn about this report, please visit: http://www.futuremoneytrends.com/index.php?option=com_content&id=376&tmp... | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bank Runs Coming to America -- Eric Sprott Posted: 03 Mar 2014 08:12 AM PST Eric Sprott on Ukraine Russia War: Capital Controls, Bank Runs, Gold and Silver Forecast Eric Sprott, CEO of Sprott Asset Management, is bullish on gold in 2014. Sprott says, "On a linear trend line, gold should be $2,100 right now . . . and if you throw on another 15%, you are looking at... [[ This is a content summary only. Visit http://www.GoldSilverNewsBlog.com or http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| What 10-Baggers Look Like—and 100-Baggers Posted: 03 Mar 2014 07:38 AM PST Dear Reader, I’m shivering in Toronto as you read this, here to participate in the biggest mineral explorer conference of them all, the annual Prospectors and Developers Association of Canada convention. I’m here to pick up the vibes I can on mergers and acquisitions in the works—I do expect M&A to heat up in the near term. Meanwhile, Jeff Clark has an unabashedly sensational—but completely factual—look at what the coming surge in the bull market could mean for us as gold and gold stock investors. It may seem to some of you that we’re beating the drum here pretty loudly on this subject, and yes, it’s true. But I am very excited about the opportunity shaping up, as is the rest of the Casey crew—I truly believe in the potential we outlined in our Upturn Millionaires broadcast, and have put more of my own money into the same stocks I recommend than I ever have before. And I am convinced that disciplined investors who have the courage to do the same will be very glad they did. Sincerely, Louis James
What 10-Baggers (and 100-Baggers) Look LikeJeff Clark, Senior Precious Metals Analyst Now that it appears clear the bottom is in for gold, it’s time to stop fretting about how low prices will drop and how long the correction will last—and start looking at how high they’ll go and when they’ll get there. When viewing the gold market from a historical perspective, one thing that’s clear is that the junior mining stocks tend to fluctuate between extreme boom and bust cycles. As a group, they’ll double in price, then crash by 75%... then double or triple or even quadruple again, only to crash 90%. Boom, bust, repeat. Given that we just completed a major bust cycle—and not just any bust cycle, but one of the harshest on record, according to many veteran insiders—the setup for a major rally in gold stocks is right in front of us. This may sound sensationalistic, but based on past historical patterns and where we think gold prices are headed, the odds are high that, on average, gold producers will trade in the $200 per share range before the next cycle is over. With most of them currently trading between $20 and $40, the returns could be stupendous. And the percentage returns of the typical junior will be greater by an order of magnitude, providing life-changing gains to smart investors. What you’re about to see are historical returns of both producers and juniors during three separate boom cycles. These are factual returns; they are not hypothetical. And if you accept the fact that this market moves in cycles, you know it’s about to happen again. Gold had a spectacular climb in 1979-1980, and gold stocks in general gave a staggering performance at that time—many of them becoming 10-baggers (1,000% gains and more). While this is a well-known fact, few researchers have bothered to identify exact returns from specific companies during this era. Digging up hard data from before the mid-1980s, especially for the junior explorers, is difficult because the information wasn’t computerized at the time. So I sent my nephew Grant to the library to view the Wall Street Journal on microfiche. We also include information we’ve had from Scott Hunter of Haywood Securities; Larry Page, then-president of the Manex Resource Group; and the dusty archives at the Northern Miner. Note: This means our tables, while accurate, are not at all comprehensive. Let’s get started… The Quintessential Bull Market: 1979-1980The granddaddy of gold bull cycles occurred during the 1970s, culminating in an unabashed mania in 1979 and 1980. Gold peaked at $850 an ounce on January 21, 1980, a rise of 276% from the beginning of 1979. (Yes, the price of gold on the last trading day of 1978 was a mere $226 an ounce.) Here’s a sampling of gold producer stock prices from this era. What you’ll notice in addition to the amazing returns is that gold stocks didn’t peak until nine months after gold did.
Today, GDX is selling for $26.05 (as of February 26, 2014); if it mimicked the average 289.5% return, the price would reach $101.46. Keep in mind, though, that our data measures the exact top of each company’s price. Most investors, of course, don’t sell at the very peak. If we were to able to grab, say, 80% of the climb, that’s still a return of 231.6%. Here’s a sampling of how some successful junior gold stocks performed in the same period, along with the month each of them peaked.
If you had bought a reasonably diversified portfolio of top-performing gold juniors prior to 1979, your initial investment could have grown 23 times in just two years. If you had managed to grab 80% of that move, your gains would still have been over 1,850%. This means a junior priced at $0.50 today that captured the average gain from this boom would sell for $12 at the top, or $9.75 at 80%. If you own ten juniors, imagine just one of them matching Copper Lake’s better than 100-bagger performance. Here’s what returns of this magnitude could mean to you. Let’s say your portfolio includes $10,000 in gold juniors that yield spectacular gains such as the above. If the next boom cycle matches the 1979-1980 pattern, your portfolio could be worth $241,370 at its peak… or about $195,000 if you exit at 80% of the top prices. Note that this does require that you sell to realize your profits. If you don’t take the money and run at some point, you may end up with little more than tears to fill an empty beer mug. In the subsequent bust cycle, many junior gold stocks, including some in the above list, dried up and blew away. Investors who held on to the bitter end not only saw all their gains evaporate, but lost their entire investments. You have to play the cycle. Returns from that era have been written about before, so I can hear some investors saying, “Yeah, but that only happened once.” Au contraire. Read on… The Hemlo Rally of 1981-1983Many investors don’t know that there have been several bull cycles in gold and gold stocks since the 1979-1980 period. Ironically, gold was flat during the two years of the Hemlo rally. But something else ignited a bull market. Discovery. Here’s how it happened… Back in the day, most exploration was done by teams from the major producers. But because of lagging gold prices and the resulting need to cut overhead, they began to slash their exploration budgets, unleashing a swarm of experienced geologists armed with the knowledge of high-potential mineral targets they’d explored while working for the majors. Many formed their own companies and went after these targets. This led to a series of spectacular discoveries, the first of which occurred in mid-1982, when Golden Sceptre and Goliath Gold discovered the Golden Giant deposit in the Hemlo area of eastern Canada. Gold prices rallied that summer, setting off a mini bull market that lasted until the following May. The public got involved, and as you can see, the results were impressive for such a short period of time.
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February concluded with the precious metals mining companies index, the HUI, retaining the lead for both the month and year to date. The major U.S. equity indexes were a close second for the month, but lag far behind the HUI for the full year. Moving up toward the head of the pack was a new contender, commodities. The Thomson Reuters/Jefferies CRB Commodity Index, a proxy for the sector, advanced about 7% for the month….
Silver had a rough 2013, no doubt.
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