There is one area that Bill Holter, Andy Hoffman and Andy Schectman are in total agreement with me. All of us have most of our wealth in physical gold, silver and mining shares.
Of the four of us, Holter is invested more heavily in mining shares. Hoffman is invested almost entirely in gold and Andy Schectman is split 50/50 in gold and silver. I am more diversified, with 10% in platinum, 10% in mining shares and 40/40 in gold and silver.
But all of us are precious metals bulls to the core! We do what we say! What is so interesting to me is the lack of conviction by so many people in our industry. We are in the minority! In my 30 years in the industry I have found most of the people who make a living in it really don’t believe in gold. At the last company I worked for, to my astonishment, only a handful of the nearly 50 sales people owned any gold and silver. Even now, their number one producer, I’m told, owns NO physical gold or silver.
That is not the case at Miles Franklin! Around here, all of the sales people buy as much as they can afford.
But even more surprising to me is that most of the numerous gold and silver newsletter writers that I follow, folks that make their living promoting and selling precious metals, advocate that their readers should own “some” gold or that you should have at least 5% or 10% in gold and silver. What’s with these people? Have they no faith in what they sell? Have they so little conviction? Are they so afraid that they “might be wrong?” Maybe it’s not so uncommon after all because both my father and my father-in-law were long-time insurance salesmen and neither had any insurance when they died. I always thought that to be so strange that I promised myself I would never be like that. There is NO WAY that I could ever sell an investment that I did not believe in to the degree that I owned it myself. But that’s just me – and the people who work for me too.
How is it possible to write a financial newsletter that talks about the demise of the US dollar and the strong likelihood of crushing inflation, and still recommend to your readers that they keep most of their wealth in paper currencies? I really don’t get it. If you are reading newsletters that don’t urge you to get most of your net worth out of harm’s way, out of paper ETFs and dollar denominated stocks, and into physical metals, you are wasting your time. It is obvious that the people that write those newsletters have very little understanding of or conviction in what they are writing about. I cut Richard Russell some slack. He says gold and cash. Still, if he took to heart the wonderful stuff he writes about gold I often wonder why he would recommend anything other than a minimum amount in dollars?
There IS a time and place to be full-tilt bullish on gold and silver and that time is NOW and it has been for the past 11-years. What sector has done as well over the last decade? None! And the reasons to own gold and silver have never been stronger than they are right now. The next few years will be the best years of this entire bull market and you can count on that. The ride will be bumpy and that’s why you need to read this newsletter. We will help you to ride it out to the very end. Jim Sinclair says, “He will be there to tell you when to sell.” We will too.
If memory serves me right, Ann Barnhardt recently told Ranting Andy Hoffman that the trouble with people like us is that we get all of our information from like-minded individuals – implying that somehow we must not be objective. Come to think of it, Backwoods Jack has told me exactly the same thing and he tries to “open my eyes” by urging me to read more mainstream media and watch more financial TV. He means well. These people, with the best of intentions, would have us diversify into other areas while acknowledging that it’s o.k. to have at least 5% or 10% in gold. A few of my friends, the financial advisors and money manager types, also say 5% or 10% in gold makes sense. I ask myself, “Does having over 90% of my net worth in a currency that is being inflated away to nothing make any sense at all?!” Not to me!
All of you should take a minute and ask yourself if you really believe that Bernanke’s QE-to-infinity policy will cause further debasement of the dollar? If you say yes, then why are you not moving out of the dollar as fast as you can? Don’t fool yourself by saying, “I can make a lot of money in other areas.” That’s like being in a small boat with a few holes in the bottom that is taking on water faster than you can bail it out. My advice is to get the Hell out of the boat before it’s too late. Switch into a boat that’s not leaking. The boat made out of gold and silver may bounce around a bit in rough water, but it won’t sink. It will get you to shore safely!!! Remember, gold is NOT an investment; gold is the highest form of money!
The main reason that I own ANY mining shares is to make a LOT of dollars that I intend to use to pay off a substantial mortgage on my house. I believe that we are living in an environment of INFLATION, not deflation – and with inflation, debt is a GOOD thing. I can pay off dollar-denominated debt with cheap dollars. Seven years ago it would have cost me 2,000 ounces of gold to pay up my mortgage. Next year I will be able to pay it up with 500 ounces of gold. Debt makes sense (if you have the assets set aside to pay it up) during times of serious inflation – like now! I would rather pay the bank 6.5% interest on my mortgage than sell my gold and silver that is increasing by 20% a year, on average just to pay it up now. It makes no sense to me to re-finance and move into a 3.5% mortgage (which would save me a lot of interest) because I would have to sell around $400,000 in gold to qualify for the re-fi. If I hold on for just another two or three years, that $400,000 should be worth $800,000 – and that’s far, far more than the interest I would save with the lower re-fi rate.
That is what my mining shares are for. I will sell them to get the dollars to pay up the mortgage. I rarely ever sell any physical metal. In fact, that is one of the main benefits of owning physical gold and silver – it is difficult (intellectually) to sell it or trade it. You buy it and keep it – and in a generational bull market, that is exactly what you need to do. Buy and hold your physicals! Mining shares are another matter. I will sell them at the drop of a hat, if I need cash. Yesterday I bought $32,000 worth of a rather “speculative” royalty company that could return 10 or 20 or 50 times my investment. Or I could lose most of the investment. But this is a calculated “investment” with the risks that go with it. If you want a BIG payout you take a big risk.
With my physical gold and silver I can sit back and tell myself, with conviction, that I will get at least one or two more doubles. That is good enough, but putting a small amount into something that could provide huge returns is fine too. In the 2000s I found four mining stocks that returned more than 10-times the money I invested in them and it was with those profits that I funded my large portfolio of physical gold and silver.
Keep the faith. The worse things become the more you will need your gold and silver. If Celente, Jim Sinclair and John Williams are even remotely right, you will need all of the gold and silver you can get your hands on. Unfortunately, I am certain that they ARE right! I have been watching this unfold for the last three decades and we have almost run out of the “road” to kick the can down. The end game will not be pleasant.