The grueling push towards $700 Gold
One of the most famous lines from Clint Eastwood’s Dirty Harry, is “do you feel lucky, punk—well do you?” I believe he had just pulled out a .357 magnum and the “punk” just wasn’t feeling all that lucky.
The gold and precious metals markets are making investors in those markets feel just as “unlucky”. The participants coming from the long side are also suffering battle fatigue and yes, they are weary. The gold cartel has been pulling out its own version of the .357 magnum and quite a few gold investors are running for the hills.
Is this fleeing good for their fleecing? In other words is it a good or bad idea for gold bulls to be running for the hills and ultimately getting fleeced? I think it’s a bad idea, but hey, that’s just me! I don’t want to be a “punk” because I know full well the gold cartel has the equivalent of its own .357 magnum but one of these days when they go to pull the trigger, a little flag is going to pop out that says “bang”! That ladies and gentlemen, is where we’re headed.
I also am beginning to believe with a more intense degree of certainly and clarity that there will be neither a “get out of jail free” pass nor will there be any instances of one entity monopolizing the global gold monopoly board en perpetuity. One of these days, we might see gold break away and shatter its old highs.
You can fool some of the people some of the time, and some of the people all of the time; but you cannot fool all of the people all of the time. What America needs now, as much as any one single factor, is transparency.
What we all need is patience. Patience is something I’ve been preaching for six years now. First of all, that’s a long time to be preaching. Secondly, to date we’ve been well rewarded for that patience and the best is yet to come. There seems to be some national sentiment that patience is just down right un-American!
A brilliant piece by Enrico Orlandini posted on Bill Murphy’s Lemetropole Café site
If you’re a gold bull and don’t subscribe to www.lemetropolecafe.com, you are missing out—pure and simple. A good example of what you would be missing is Enrico Orlandini’s piece titled Gold: Where to Now. Find Mr. Orlandini at www.dowtheoryanalysis.com . So with Enrico’s permission, he is basically stating that we are in the second stage of a bull market in gold—perhaps even the early part of the second stage. The second stage can last for up to six years. After that we get to the famed “blowoff stage” when your auto mechanic and your local baker will be giving you tips on gold stocks.
This is all fine and good but what caught my eye is that Mr. Orlandini gave the reasons we are in a gold bull market in very simple succinct language. He states that no (fiat) currency in the world is backed by anything other than a “promise to pay” (I personally call this the IOU nothing syndrome) and that those same countries have their printing presses running virtually 24/7. This is because, and I quote, “All the world’s major economies are engaged in a printing war in an effort to have the cheapest currency. A cheap currency leads to cheap prices for exports.” End Quote. I’ve stated in the past the world’s largest economies are in a rush to see who can get to the basement first by trashing their currency. Of course, cheap currency means cheap exports.
The real problem remains, be careful for what you wish. This is a dual edged sword and those debased currencies may well lose the con-fidence of those they wish to honor that currency such as other countries. Soon it becomes a universal multilateral con game. Currently the world is involved in a con game and the pawns in that game are the citizens who have to go along with the ruse whether they like it or not. Even those that would like to change the system because they can observe the systemic flaws are powerless to do so.
How does one protect oneself? Gold, Silver, and Patience.
I realize that the gloom in the gold community is so thick you can’t see ten feet in front of you. But are you in this for the short term or the long term? The long term requires patience.
Gold Investors are Battle Tested
Look, we always have to keep things in perspective. Like it or not, the geopolitical realm affects just about every aspect of our daily lives. It affects gold.
Is the geopolitical realm and how the US interacts with the rest of the world better or worse than it was six months ago? That is akin to saying are you “better or worse” than you were four years ago”? Is the US economy better or worse than it was six months ago? What about the housing sector? What about gasoline and oil. What about the status of the US dollar? Once again, we must all realize that we live in a world of spin, semi-truths, and misinformation.
Those of us who have been in the trenches for this past seven years or so are wondering when will the big “payday” come. First of all, we each need to determine what level of “payday” we are seeking.
I think Bill Murphy of www.lemetropole says that his sentiment indicator is lower at $650 gold than it was at $350 gold. That can be discouraging to say the least. We have to realize the markets can stay irrational much longer than we can stay liquid. Besides that, many of you have had big paydays and are looking for bigger ones. And so it goes.
Hold On!
However, even though you may be battle tested and weary of the status quo, my advice is to hold on to your gold and silver positions. Moreover, I would suggest to you that now is an excellent time to pick up a few bargains that are going begging. Buffalo Gold at $1.00 is very inexpensive given its excellent projects, deals that have been acquired and or spun off and an aggressive management group.
Why is the price so low? For one, it is following the sentiment indicator of gold. It has renegotiated its Mt Kare deal with Madison and it has spun off its Uranium assets. Investors simply have not taken the time to understand the ramifications of these transactions. This is when it pays to read and to think for ourselves. Buffalo Gold was close to $2.00 US in April of 2007. It will get there again and probably before the summer is over. And incidentally I will be writing up Madison and perhaps Buffalo in the near future because these recent negotiations were a win-win for both sides. Imagine that, a deal that actually made sense and was a benefit to both companies.
Oromin Explorations (OLEPF) is absolutely my favorite junior mining company. I’ve known Chet, Jim, David, Doug and the group for close to six years now. I have accumulated large positions in all the companies, most of it in the open markets. Oromin Explorations and Madison Minerals (MMRSF) are companies I am purchasing at these depressed levels. Why? In the case of Oromin, they have delineated region after region at Sabodala in Senegal with excellent drill results. All you have to do is to go to their website and review the latest press releases. It’s all there in black and white. I honestly believe—my own personal opinion—that we’ll see OLE above $3.00 US before the end of the year. Madison is one of those companies your baker will be telling you about in a year or so. It’s been a long haul but it will be there for you at the end of the day if you exercise patience!
I also like Geocom (GOCM) and Golden Phoenix (GPXM). Peter is much more up on Win-Eldrich (WEX) than I, but I believe they’ll both benefit as “sister companies”.
All of these companies depend a great deal upon the price of gold. That requires patience and to truly understand why we need that patience, we simply have to go back to square one and understand Mr. Orlandini’s premise.
Once we get through $700 gold, and we will get through it, all of these quality junior mining companies in such disfavor now will appreciate rapidly later on. If you’re contemplating waiting until the last minute before jumping in or getting back in, I must remind you that invariably the market is quicker than you are.
Look for upcoming articles on Madison, Oromin, Golden Phoenix, and Geocom. There may be others.
If you’d like to be on our mailing list please send us your physical mailing address along with your email care of our email address below.
Finally, I am having a personal web site created which is under construction. It will be mainly to house past articles, and so I might be able to communicate with you in shorter articles. I don’t anticipate anything too fancy but it should serve the purpose.
In conclusion remember that your patience will pay off handsomely. Even though many of you are weary of the turmoil and short term machinations of this gold bull market, remember that if you act wisely and not react to the maddening crowds (and pundits) you will be rewarded handsomely.
We are in a long term bull market in the precious metals. Be patient, be circumspect, and be careful.
Until Next Time,
D. Stewart Armstrong
Posted by D.Stewart Armstrong in Articles