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David’s Commentary:

I receive a lot of Emails from our readers. I try and answer all of them. Every so often, I get one that will resonate with our audience. 

Here is the Email:

From: Arlie S

Subject: Re: Stuck in the Twentieth Century

Good morning David,

I have enjoyed your newsletters for many years. 

Please do not take what I have to say in a negative tone towards you or your newsletter. 

I can appreciate the fact that you and a lot of people associated with the precious metals bought gold and silver at a much lower price than the current price even though it seems to be quite low.

There are a number of us that are in our 70s and 80s that started reading your style of newsletter and bought when silver was in the 30s and 40s. 

In most cases our families condemned us for selling what was considered normal assets to buy silver but we all thought that we were protecting our assets and indirectly protecting what would eventually transfer to them. 

Unfortunately, some of us are dying off and our families are selling the silver at current market as they do not think the future that we talk about is even possible. 

Just thought that maybe you might be interested that some of us have basically altered our lifestyles to accommodate the kind of thinking that goes with silver accumulation and have done so at a great financial loss and are now realizing that the mistake is now affecting our loved ones.

We have had to listen to the criticism for some time only to die off, realizing that we were wrong or at the very least premature in our thinking. 

Anyway, just a line to let you know that there are a lot of elderly people out here that are not in a position to accumulate more silver at this seemingly low price and have put our last years in a very unhappy state because not everyone thinks as we do and we are, as mentioned, dying off with some of our families close to despising us.

However, that being said no one forced any of us to go this route and some of us hopefully will live long enough to see our families getting some benefit from our thinking. 

Keep up the good work.

Arlie in B.C. Canada.

David’s Commentary:

Many of our readers can relate to Arlie’s comments. Investors who buy stocks are usually guided by financial newsletters, financial advisors and money managers. They never ever endorse our views. They didn’t understand why we were buying gold and silver during the 11-year bull market while gold and silver were soaring, and stocks were tanking. With that group, and it usually includes friends and family, we can never win. They think we have a lose screw. 

Of course, it makes more sense to buy low and sell high. But who knows what “too expensive” is? At $30 silver didn’t seem too expensive. It rose another $20 before it turned down. The same can be said for gold. It didn’t “feel” too expensive at $1,900.

The reason people buy gold and silver at “elevated” prices is because to them, it appears that the price is not “elevated,” and they believe that it is safer, even at that price, than the alternatives, like stocks or the dollar. 

We believe in common sense and fundamentals. When debt and money creation are out of control, buying gold and silver rings true to us. At any price. Need I remind you that the dollar has lost over 97% of its value in the last 100 years. Simply put, the dollar has no long-term future. Common sense and fundamentals are now screaming that the stock market is too high. And gold and silver are too cheap. This will reverse (once again) and stocks will fall, and metals will rise, dramatically. Even then, our detractors, and they are many, will not give us credit for being correct. I can hear it now: “Even a broken clock is right twice a day.”

A well-balanced portfolio will have stocks, bonds, cash and some gold and silver. The ratio of these assets should change along with their price. Sometimes it makes sense to go heavy on stocks and other times one should go heavy on gold and light on stocks. Easier said than done! Fear and greed are always there waiting to cloud our judgment – in stocks as well as precious metals. 

If your children and grandchildren give you a hard time because they are not happy with the way you manage your money, then they don’t deserve an inheritance. They should be grateful and say thank you!  Don’t worry about what they think. Worry about yourself and your ability to maintain your standard of living. And you are not wrong, just be patient. In the meantime, if you have to sell ounces to pay your bills, so be it. At least gold and silver are liquid and have value. But there are no guarantees, be it gold, silver OR common stocks. They all have their day in the sun and ours is coming again.

It’s unfortunate if you have to sell gold or silver when the price is low. The same can be said for stocks or any financial asset. We don’t control pricing. It is what it is. It is just a matter of timing. Ideally, one would prefer to sell high and buy low, but such is not always the case. At least with gold and silver, they are “financial insurance” and when they are needed, you will be glad you own them. 

As I have always said, high prices in gold and silver has a downside. Everything else will be underperforming and the economy will not be robust. Be careful what you wish for. 

Those folks who criticize gold and silver view them as an investment. No, they are not. They are financial insurance. I make a distinction between a “core” position and an “investment” position. I would never sell my “core” unless it was a financial necessity. I did sell gold and silver when the prices started plunging. Not the core, but some of the investment portion. I also started replacing the ounces I sold with new purchases in the last 12 months – at much lower prices. Anyone who believes that stocks are a safer place to be NOW than gold and silver is living in dreamland. 

I purchased gold as low as $300 and as high as $1,650 – and everything in between. I purchased silver as low as $4 and at $22 and everything in between. My AVERAGE price is below where the metals are now. But I don’t care because the only time the price is important is WHEN WE SELL IT. The same is true with your stocks. If you are tempted to hold onto them when the price starts to really implode, assuming it is just a normal 10% or 20% correction, you might remind yourself what happened to silver, which is down 70% from its peak. Do you really think an 8,000 DOW is impossible? Did you think $15 silver was impossible when it was $50? Just sayin’.

When it comes to gold and silver and the reasons that it is critical to own them, most people don’t have a clue. Finding a new client interested in gold or silver is like finding someone interested in buying a Blackberry. A friend of mine who owns a large precious metals firm gets his prospects through mailings and TV adds. The results are so bad he recently stopped advertising. Younger people have only experienced a strong stock market and a weak gold and silver market. You have to be older to have lived through a cycle or two, to understand that these things have a life cycle and what goes up comes down and what goes down eventually goes up.

There are two entities that I follow closely to get a “big picture” view of the gold and silver market. JPMorgan controls the price on the COMEX, period! They continue to short the paper, lowering the price, and at the same time they are emptying out the ware houses of silver and gold. And China is buying up all the gold they can find. It seems that they are preparing to dump dollars (Treasuries) to make a statement to Trump – stay out of the East China Sea and cut the tariff crap – and are acquiring tons and tons of gold beforehand.

They’re all into gold.  Absolutely.  Yes, virtually all of them own gold.  That’s what’s so interesting. The Chinese buying is continuously going up and up and up without stopping.  The Chinese know what is happening.  They know it and they will continue to buy gold.  And one day that’s going to have a major influence on the gold price.

Again, last month we saw imports of gold into Switzerland and then exports to Asia and India. Last month, over 70% of the gold import figures (into Switzerland) came from London and the United States.

We again see that Switzerland is buying the 400-ounce bars from the UK and US bullion banks and converting them into 1 kilo bars and then shipping them on to Asia.  Last month there was hardly any buying from the mines.  It all came out of London and New York.” 

And that proves again, Eric, that central banks are either leasing their physical gold into the market or selling it covertly. “

Zero Hedge

Greyerz: China Just Took Delivery Of A Massive Amount Of Gold From London & New York

Via KingWorldNews.com,

Egon von Greyerz met with a large group of individuals from China that manage money for the elite in China. 

They went to Switzerland to meet with Egon and this is a small portion of what they discussed:

Eric King: “Egon, they (the money managers for the elite in China) have virtually all of the high net worth clients into (physical) gold.”

The Chinese Know What Is Happening

Egon von Greyerz: “They’re all into gold.  Absolutely.  Yes, virtually all of them own gold.  That’s what’s so interesting. The Chinese buying is continuously going up and up and up without stopping.  The Chinese know what is happening.  They know it and they will continue to buy gold.  And one day that’s going to have a major influence on the gold price.

We again see that Switzerland is buying the 400-ounce bars from the UK and US bullion banks and converting them into 1 kilo bars and then shipping them on to Asia.  Last month there was hardly any buying from the mines.  It all came out of London and New York.” 

READ MORE HERE

Egon also has interesting things to say about the stock market, which is supporting the economy.

Egon von Greyerz

The Bull Is Dying

Bulls are not killed off easily. They are strong, fierce and have real staying power. And this is what should be expected at a top of a secular bull market. Injured or weakened, the bull will still go on which is the case with many stock markets. Whilst some markets have peaked globally, others show strength. A week ago, markets were ruffled by major falls. Was that the signal for the end of a multi decade bull or was it just another brief correction before the bull breaks out to much higher levels? With a further fall this week, the Dow is now down 2,000 points in October which certainly confirms that the bull is seriously injured, maybe fatally?

READ MORE HERE

Real Wealth Strategist

Gold Is Your Insurance Against a Market Crash

Matt Badiali

Gold is your insurance during a wavering stock market.

Looking back over the last six years, we see an interesting correlation. U.S. stocks went up (over 90%) and the price of gold fell (-26%).

You can see what I mean from the chart below.

The price of gold moved opposite the value of the S&P 500 Index. That wasn’t good for gold owners at the time. But as most of us who own gold understand, it was doing its job.

You see, I own gold for insurance against volatile times.

Gold is a widely accepted store of value. It doesn’t corrode or rust. It’s beautiful. And it has held its value since the first nugget was plucked from a stream bed millennia ago.

READ MORE HERE