I thought I would put together a piece written from the standpoint of stepping back and looking at the big picture in the metals market.  First off a couple of questions, assuming you purchased gold, silver or the miners prior to let’s say 2007.  Why did you do this?  Or let’s say that you purchased silver in early 2011 or gold in Sept. 2011 and bought at the so far absolute highs.  Why did you make your purchase in the first place?  I would venture to guess that almost everyone (except for the momentum buyers who couldn’t care what it is and what isn’t, as long as it’s “going up”) made their original purchase for basically the same reasons.  10 years ago, 5 years ago and especially 2 years ago you purchased metals and related assets because you saw the country (entire world) going in the wrong direction financially.

Has anything changed?  Have we changed direction?  Did the “masters of our universe” discover some new “tonic” that could make everything “all better?”  Or have they doubled down, time after time with the same solutions that not only did not work the first, second, third or fourth… times BUT got us into this mess in the first place?  Wasn’t one of the reasons to purchase gold in the past was because governments (including and specifically the U.S.) were “going” to go bankrupt?  Now that they have mathematically gone past the point of no return and default (one way or the other) looks to be a certainty, is this now a reason NOT to own gold?

Let’s look at it from a couple of different standpoints.  Has anything been done in any fashion whatsoever to correct the fiscal insanities?  Have any Central Banks anywhere done anything at all that would make their fiat currency more “sound.”  Have there been any big discoveries of gold or silver that would significantly expand production?  Have any big mines been constructed?  In fact, we have had several mine disruptions worldwide that will serve to lessen an already tight supply.  The Grasberg mine in Indonesia suffered a tunnel collapse, the Kennecott mine in Utah had a structural collapse, and union unrest in South Africa has slowed their production.  So the answer to “has supply increased” is an absolute “no” and supply may actually be down slightly this year.  I might add that mine supply has barely grown at all since the year 2000; can the same be said for money supplies or debt outstanding?

While on the subject of “supply,” please remember that in reality an unlimited amount of “paper gold” (what an oxymoron {emphasis on MORON} this is!) can be created with the push of a button.  This was displayed on April 12 and 15 when 40% of the world’s gold production was sold in less than 12 trading hours.  This “supply” caused the price to drop and has blown up in the face of those who wanted (created) a lower price.  Read the Zero Hedge article Stunning Images From China: Ten Thousand People Waiting In Line To Buy Gold and look at the pictures recently taken in China.  These are buyers, waves and waves of buyers taking anything that is offered.  How long do you suppose the LBMA, COMEX and GLD will be able to dishoard gold to satisfy the demand?

The reasons to buy gold, the reasons to own gold, the reasons to get out of the system and protect yourself have not changed, they have only intensified.  Your original thoughts were correct, now they are more correct.  Your initial thought process is now more correct than it ever was and you should be emboldened, not “scared.”  All of your “fears” that steered you toward gold in the first place are now much more intense, out in the open and even more obvious.  If you “thought” back in 2007-2008 “my gosh, they are going to have to print unlike ever before”…you were right.  You now are able to look backwards and see what the game plan is; you no longer need to “see the future” as you did back then.  Now, the “past” is the future because there are no other “saves” or policy options available.  All of the bullets have been spent, all of the tricks played.

Yet, what has transpired has the owners of gold (especially in the U.S.) scratching their heads and scared out of their wits.  “Gold is risky,” “Gold is in a bubble,” and all of the other nonsensical “talking points.”  The fact is demand is just now beginning to soar at the same time that supply of inventories is almost fully drained.  I would tell you that right now gold, silver and the miners are at historic valuations.  They may be even better buys now than they were back in 2000 when gold traded to $260 and Silver to $4.  I say this, because the inventories available to satisfy demand have already been emptied over the last 13 years in an effort to retard the price movements.  From here, I believe that the future percentage gains in terms of fiat will absolutely dwarf the gains made over the last 13 years.  I also believe that the amount of time required for these gains to occur will be like the internet versus the pony express.  The “mark up” will be done in a short amount of time period as possible and thus allowing as few as possible the exit door to safety.  The entire takedown of the metals complex was done for 2 mutually inclusive reasons:

1. To get as much of the public as possible OUT of gold and thus back into harm’s way

and

2. Allow the elite insiders easy access to filling their coffers with “safe money.”

So, “What has changed?”  Absolutely nothing other than the “intensity” of reasons to own gold and silver.  Don’t be scared out of the only insurance policy capable of actually paying out when the inevitable crash comes!