The face of the US Economic Recovery:
Well, Sinclair’s $1,630 has held, once again. After a brief $10 plunge immediately after the Fed’s minutes were released, gold recovered all of its losses and posted a small gain. Still range-bound on either side of $1,650, gold is biding its time waiting for the signal (a renewal of QE3) to power ahead to new highs. Sinclair’s June target is still looking good to me.
Yields on the 10-year US T-Notes have dropped below 2% again and are holding just on either side of that level, even after the Fed’s announcement. The Fed is definitely continuing its Operation Twist bond-buying program. For those of you who are not familiar with what Operation Twist is, it amounts to the Fed buying Treasuries to hold down interest rates. It is another (milder) form of QE. The Fed cannot stop printing more money and buying bonds. Sinclair is right – QE to infinity – and infinity in this case means a collapse of the dollar. This is a recipe for hyperinflation. How will the Fed be able to live up to its promise to hold interest rates at 2% for the next three years without sacrificing the dollar? Things will start to get interesting very soon now.
If that is not troubling enough, what will happen when all the hot money created by the ECB hits the streets? Currency debasement is everywhere you turn. You know what you have to do to protect yourself. This temporary lull in the price of gold is a Godsend to you, but only if you take advantage of it.
Yesterday, I presented Bill Holter’s views on mining shares and today I present Jeff Clarks views. I hold both of them in high regard and many of our readers do own or think about owning mining shares. Our own Ranting Andy Hoffman is very anti-gold shares at this point in time and believes that they will go no-where until such time as the Cartel is defeated and gold and silver start to trade freely, without the constant manipulation.
Yes, the shares are very, very cheap now but the risk is real that the stock market could suffer another major setback and if it does, it will pull the shares down with it. My suggestion is for you to wait a bit, even if you pay more for the shares, and hold off until the sector, the mining shares, starts to take off. Mining shares are the frosting on the cake and should only be considered after you have acquired a core position in physicals.
I have about 2.5% of my precious metals portfolio in mining shares and the rest in physicals. And the only stock I currently own is Sinclair’s Tan Range.
My comments on mining shares do NOT include ETFs or mutual funds. I avoid both of these categories completely. If you want to own shares, then buy individual companies that you have carefully researched. Juniors and exploration firms are very risky now, but they do offer outstanding potential – if you pick right and are lucky.