How significant is gold's break through $1,000 on Tuesday? We have been here before, most recently in February, but each time the yellow metal has failed to hold the line. … I had a call at the weekend from my old friend Jim Slater to tell me about a new investment fund he's involved with. … Now, if I'm ever unsure about whether an investment theme has the force with it, the involvement of Jim usually persuades me that something significant is going on. There was a time when he was involved with pretty much any deal of importance in the square mile. Remarkably, he is still active today, in (I'm sure he won't mind me mentioning) his 81st year, and there has not been an investment fashion in the past decade or so that he has not analyzed with a laser-like focus and made a bundle of money out of. He saw, and got out of, the TMT bubble after profiting from the lunatic appetite at the time for so-called incubator funds. He has already made one small fortune from the rise in the gold price over the past eight years through a company called Galahad Gold. Last year he was happily buying corporate debt at distressed prices and now it's gold again. So what has caught his eye this time round? The advertising blurb sums it up pretty well: "given the current uncertain economic environment, the recent instability of capital markets and the unprecedented amount of money being printed, it is now a good time to invest in gold and base metal mining companies." – Telegraph
Dominant Social Theme: Anticipation – or not?
Free-Market Analysis: We have returned to gold analysis several times recently since gold busted through US$1,000 once again, only to have its reins pulled back rather quickly. But since gold is on the mind of many, and at least some of our readers, we are certain, it may be time for a refresher course in what we have learned about gold and silver in lo, these many years – and believe us, we've learned the hard way! There's never anything simple or easy about investing, especially through wild business cycles.
And this is a wild business cycle, complicated by the fanaticism of the monetary elite, which is determined to hold onto its money printing central banking franchise in some form or other. We're not entirely sure that the monetary elite, such as it is, was unhappy with the recent recession/depression, but it is fairly obvious to us that they don't want to be blamed for it and are apparently worried that their activities are far more easily scrutinized via the Internet than ever before.
All of this has put a spanner in the works. Instead of a nice, neat recession which morphed almost imperceptibly into a more global currency complete with global regulation, etc. you have the world spinning off in different directions with different ideas about currencies, regulation, recessionary responses, etc. We don't think all of this is neat, easy, planned or scripted. In fact, we think the script has gone flying out the window and the monetary elite are simply, at least to some degree, holding on for dear life like the rest of us.
So what do we anticipate? As with the 1970s, when things spun out of control for a while, we anticipate eventually upward pressure on the price of gold and silver that moves precious metals past the high-water marks of the 1970s (accounting for inflation). As gold and silver rise in price, securities become more attractive, which is why you will see over time various forms of monetized metals (paper notes of all sorts) become more sought after. These of course include the much-maligned mining stock sector, including volatile junior miners. As the bull market heads toward buying panic in metals, before a blow-off, anything with an exposure to gold and silver may be a strong buy.