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Call Me Delusional, by Edgar J. Steele
The following is an e-mail I sent three weeks ago to a small group of exceptionally-forgiving
friends of mine, in which I pre-announced my hunch that things have changed
fundamentally in the precious metals (PM)
markets:
There are lots of possible
reasons: options expiry last week, new administration coming, new econ[omic]
team (same as the Clinton econ team, which ran the [Plunge Protection Team]
PPT into overdrive), China going into recession, Motor City going BK, a need
to
devalue
the dollar in the face of global recession, shorter hem length, planetary alignment...
Fact is, though, it is just a hunch. An educated guess.
Both gold and silver were up smartly last Friday and this morning. This may
be a trend worth watching. If you have the ability and have not yet gotten
aboard
the train, this would be a good time. Silver is much more volatile than gold
and moves both quickly and over a larger amount of real estate than does gold.
Currently, silver is historically about as undervalued vis-a-vis gold as ever
has been seen. A quick march right through $20 per ounce is coming - of that
you can be certain - it's the timing that is fuzzy, is all.
eBay hasn't yet caught a whiff of the trend, if a trend it is, thus the premiums
for silver and gold still reflect last Thursday's prices. A good time to buy
on eBay but not to sell. I hear that Tulving has silver for sale.
Throughout this whole debacle during which physical and paper PMs parted company,
resulting in a true "Black Market," real, physical silver never has
gone below $15 per ounce. Recall that I said a while ago that you never again
will see silver below $15. If we see a sudden upsurge in the spot price of paper
silver, it will be interesting to see if the 40-60% physical premium carries
along - it probably will for a while, then decline.
My feeling isn't strong enough yet to go public to my list or web site with
my hunch. This missive goes out just to a handful of those who I know will
forgive
me for being wrong, as I so often seem to be regarding short-term PM price movements
(though my long-term trend forecasts have been right on the money).
I'm looking for serious and significant politico-social events during the next
90 days. All hell could break loose, in other words. This, perhaps, is the single
most important component of my hunch.
- - -
[Some follow-up commentary, also by Edgar Steele, added on December 15th:]
Though I have personally suffered tremendous losses as a result of the government's
months-long manipulation of the dollar, silver and gold, it has pained me even
more deeply to know that others have sustained such losses, at least partially
in reliance upon my outlook.
Fortunately, most have followed my recommendations to the letter and bought
only physical silver and taken personal delivery. They will be made whole and
then some. A whole lot more than "some," I firmly believe.
Some list members, like myself, have been foolish enough to ignore my fundamental
advice to hold only physical PMs, which is all that I continue to support publicly.
They and I took substantial positions in mining stocks on margin and we got
destroyed during the past few months. It was a calculated risk. I never imagined
that the government would drive down PM prices while the stock market crashed
and simultaneously inflate the dollar beyond the bounds of all reasonable foresight.
Our recent experience illustrates the folly of investing (gambling, actually)
with borrowed money.
Now I have no choice but to continue to gamble on the leverage inherent to
mining stocks, though I have been stopped out of all my margined positions.
As noted below, I believe that the fundamentals have shifted once again, more
in line with what existed a year ago.
I still like Pan American Silver (PAAS) and Gold Corp (GG), but am particularly
impressed with Coeur d'Alene Mines (CDE), which has declined well beyond the
average during the past few months (to less than 10% of its value a year ago,
becoming a true "penny stock" today) and which appears to have more
headroom than most, as a result. I have bought as much of CDE as I could with
what remains of my brokerage account balances (not much), though I continue
to hold modest positions in PAAS and GG, as well as a couple of small firms
that I cannot in good conscience suggest to others.
Do as you will. You know what I am doing. I can in good conscience recommend
only that you buy gold and silver and take physical possession. They are at
bargain levels today and are readily available if you are willing to pay the
premiums being commanded. Do not mistake spot price for market price.
Check eBay, which is the closest thing we have to a published market these
days. Here are links so that you easily can check on prevailing eBay silver
and gold prices.
Here are a few good sources for gold and silver bullion: Tulving,
Bullion Direct,
Gold and Silver
Now,
and Seek Bullion. (Yeah, well, I wish I got something for recommending these
sites - something beyond the knowledge that you almost certainly will be treated
fairly
and given
good prices, that is.)
I believe that the next sixty days or so are among the most dangerous ever
faced by America. We are in transition, with a do-nothing, lame-duck president
standing in the way of a nation still transfixed by the vision of another man
falsely promising change while that man (Obama) surrounds himself with the
very people who created the staggering problems, both economic and political,
now facing us.
Israel is whipping itself into a fever and virtually certain to strike out
at Iran. Pakistan and India are on the verge of nuclear war. Economic riots
have spread from Greece to other parts of Europe. Incredibly enough, pirates
actually roam the seas again. All hell could break loose at any time, folks.
Take care of the fundamentals first: location, protection, survival. Then,
and only then, should any of this financial stuff matter to you.
As bleak as this Christmas might seem to be shaping up, it well could be "the
good old days" when viewed from just a couple of years hence. Enjoy it
well and be particularly attentive to your family. In the long run, family
is all that you have. And friends, don't forget. I count you, particularly,
among my treasured friends.
Merry Christmas. - Edgar J. Steele
JWR Adds: Unless someone is very wealthy, I
concur with Mr. Steele thatthey buy only physical (read: tangible, in your
personal possession)
precious
metals. Those might prove useful for barter in the recovery phase of an economic
collapse, but not in the very depth of it. Here in the States, the easily-recognizable
pre-1965 circulated
silver
US dimes,
quarters, and/or half dollars will be ideal for barter.
Steele and I are are also in complete accord on this statement: "Take
care of the fundamentals first:
location,
protection,
survival.
Then,
and only
then,
should
any of this financial stuff matter to you." Or, as I put it,
"Get your beans, bullets, and Band-Aids squared away before 'investing'
anything extra."
