-- Posted Wednesday, 13 July 2005 | Digg This Article
Part I
“Sometimes You Get it Right!”
July 7, 2005
Dear Friends:
I wrote this article, A 2005 Gift to the Gold Community, way back in the beginning of the year and had a terrifically positive response from it. Peter has been gracious enough to repost it. Sometimes you get it right is indeed the message and I hope you’ll find the piece as beneficial in July as you did in January. Information is the most valuable investing commodity; accurate information is worth its weight in gold and you can quote me on that one.
The gold community currently appears to be suffering from low morale, especially as would pertain to the junior mining and exploration companies. I believe that Jim Sinclair has his finger on the pulse in his July first commentary. While gold is being pounded down towards the $420 level, there are entities endeavoring to pick up gold stocks “on the cheap” during the move down. Is it orchestrated? I agree with Mr. Sinclair and believe that it is.
If that is accurate information, then you have the keys to your own particular fortune. Buy low and sell high. Right now we are at the low point. It is a low point in a primary trend in gold that is definitely headed higher.
The bottom line is that it is darkest just before the dawn. Our dawn in precious metals is coming so don’t be dissuaded into selling your gold shares. Take a firm stance on the positions you favor and don’t bolt just because the price of gold is being hammered. In the big picture, this roller coaster of gold pricing is but useless noise. Don’t listen to it as it is counter productive and it is created solely to scare you out of your positions at the worst possible time.
Gold is heading upwards towards unheard of heights. The timing is always difficult to predict. However, remember that the fundamentals of an historic price rise are more in place than ever before. Things like the US trade, account, and manufacturing deficits, coupled with ever expanding entitlement programs, and the escalating plethora of international perplexities all contribute to a social order which will vacillate and remain in a state of flux for some time. This is all gold positive.
I want to stress that it is important to be careful for what you wish. When the precious metals complex reaches its zenith, there could be systemic difficulties in the overall social order. I say that because with such powerful anti-gold forces in motion, when the dam breaks and the PM prices move to historic heights, it will mean that those forces will have been overcome. That might not be a pretty picture. No intelligent person would want war or trade conflicts in this day and age. America is not in the best of shape. What we need is sane political decisions that are based in truth. Often times these are mutually exclusive categories. We need to be flexible, aware, vigilant, and tolerant. Americans in particular need to put their petty individual differences aside and work for the true good of the Republic as the founding fathers envisioned it. In some ways, that is asking a leopard to change its spots, but it can be done. However, our political institutions really need to focus on the people they represent and not the special interest groups that pay their way; pave their way into office.
In the interim, the “Powers that Be” on both sides of the Atlantic, do not want you to be losing confidence in their fiat currencies and will do everything in their power to prevent such occurrence. Bill Buckler of the Privateer always begins his weekly gold commentary by stating that gold is a political metal. Please don’t ever forget this as it is a brilliant observation in its simplicity. As a political metal, gold is at odds with the dollar and with the Euro and even though the dollar and the Euro are jockeying for position on the international stage, they are in the end, just paper with colored ink. And if the truth really be told, neither of them holds a candle to gold either individually or even collectively.
Richard Russell in his latest monthly newsletter is reiterating the same basic ideas. I quote from his Dow Theory Letters:
“It’s taken almost two centuries for bankers to pull the wool over Americans’ eyes, but today you and I are working for intrinsically worthless paper that can be created by bureaucrats — created without sweat, without creative ability, without work, without anything but a decision by the Federal Reserve. This is the disease at the base of today’s monetary system. And like a cancer, it will spread until the system ultimately falls apart. This is the tragedy of the great lie. The great lie is that fiat paper represents a store of value, money of lasting wealth.”
We live in a global village and one that is getting smaller and more competitive by the day. As more people look to protect their wealth and look towards the future, gold will come more and more into play. Don’t be left out.
Gold and gold shares had a very impressive “run-up” several years ago and it was taken very seriously by the establishment. After all, if gold is a political metal and competes with the dollar and other fiat currencies, it stands to reason that they will throw everything but the kitchen sink at it in order to keep it “under control”. That is exactly what they’ve done. The fly in the ointment is supply. There is only so much physical gold to go around. You cannot manipulate physical supply. However, you can manipulate paper supply. I don’t like the idea of buying shares (ETF) of gold via the stock market. It is simply another vehicle that they use to manipulate a “supply” of virtual gold which is only a number on some computer. Do I trust them? Yes, just like I would now trust the people who ran Enron.
However, time and events catch up with the best laid plans of mice and men, and we are now at points where that control over gold vis a vis the usual mechanisms of market machinations are at the end during this particular cycle. The Powers that Be will need to create new mechanisms in order to keep gold under control. However, with so many people desiring gold as a way of preserving wealth, those mechanisms are going to be more and more difficult to implement. This is for the simple reason that it is so very limited in supply; real supply, not virtual or derivative supply.
Don’t forget that both governments and individuals will be competing for the same very finite supply of precious metals and this again makes it difficult to control the markets. They will endeavor to manipulate, to manage, to control, but ultimately they will fail because in the end, gold is freedom. You’ve repeatedly heard it said that gold is real money. When you own gold, you don’t own the liabilities of others. Physical gold cannot be replicated and therein resides the problem for the groups that want control. The very same group of people who are preaching about spreading freedom and liberty around the globe are the same group(s) who are endeavoring to compress your wealth into a pile of paper and promises.
I ask you one question and then I will take your leave, dear reader. When has the government willingly and obligingly acted with integrity on any promise it has made where your money is concerned. Put another way, if you had a choice between gold and promises which would you choose?
At this point in time, we simply cannot believe at face value what the mainstream press presents to us as accurate information. It is up to each individual to discover alternate sources of information which will assist them in making intelligent choices. Once again, I offer up to you alternative choices for accurate and erudite information.
Until the next time,
Kindest regards,
D. Stewart Armstrong
consulting@seacoastpub.com
Part II
A 2005 Gift to the Gold Community Revisited
A Little Background
There are many people new to the gold markets that will need accurate information as would pertain to those markets, especially as we move forward into 2005. I’d like to suggest five or six different locations on the web where one can acquire that accurate information; not only for gold, but for financial news in general. Taken singularly these sites are excellent, taken as a whole; they can offer an even better “big picture” scenario for both the novice and the experienced investor.
The list, of course, is by no means inclusive as there are literally hundreds of advisory letters and web sites devoted to precious metals and financial matters. Upon reflection, it feels as though I have subscribed at one time or another to a good portion of them but of course I haven’t. I have read a goodly number of them. However, these particular sites that I bring to your attention have worked well for me over the years; I hope they might also be of benefit to you.
I should tell you straight away that my area of specialty is the junior mining sector and I am a consultant for a junior mining consortium called Mine-Tech based out of Vancouver, British Columbia, in Canada. They have three excellent properties under their umbrella: Madison Minerals (MMR-V/MMRSF-OTC; website: www.madisonminerals.com ), Oromin Explorations (OLE-V; website: www.oromin.com ) and Lund Gold (LGD-V; website: www.lundgold.com ). I believe that each of these companies has excellent prospects and extensive information about them can be found on their web sites. I’ll be writing more about them at a later date, but for now I just wanted you to be aware of the fact that I’ve been around the block a few times where gold and gold companies are concerned—both seniors and juniors. You might also take a moment or two and do a little “due diligence” of your own about these companies and then we’ll reunite at some opportune time in the future to discuss them. One point I will mention is that the principals in this management group were involved in the Eskay Creek and Arequipa discoveries—two astounding success stories.
I am also working with a group out of Calgary, Canada and they own and operate Trio Gold. (TGK-V; website: www.triogold.com). Trio has three excellent projects, the principal one being the Empire Mine in Idaho. However, they also have an excellent property on the Carlin Trend in Nevada and an exciting project in Chile that could turn out to be a substantial Iron Oxide, Copper, Gold (IOCG) Deposit.
However, this article is more about offering you some ideas as to where you can acquire a conglomerate of information that can be useful to you in seeing the world as it really is, the big picture if you will, and not as the mainstream media would have it painted for you.
2004 has been a difficult year for the United States in many respects. The war in Iraq, the lackluster economy, the amount of debt on every level (personal, corporate, state, federal) the elections, the declining status of the US in the international community, and the vicissitudes of the financial markets have all combined to leave at least half the populace unhappy in one regard or another. I am not certain that the ball is indeed supposed to bounce this way (as in that’s the way the ball bounces), but still we should be counting our blessings.
I have to ask a rhetorical question as an aside; how many of us are really aware of what is going on in the world around us? For that matter, how many of us are aware of what is really occurring in our own country? Isn’t it time that we dig a little deeper for the truth and if and when possible, bring a few more of our fellow citizens “into the fold”?
It has also been a particularly difficult year for gold and silver investors. But then again, what’s new?
Why? Well gold investors have been caught in between the nether land of the first phase of the newly emerging bull market in gold where significant gains were made, especially in some of the mid-tier and junior mining companies, and the second phase which has just recently gotten under way. I feel we are ‘twixt and between’ which is always a difficult place to be. I have no crystal ball so I can’t offer you any projections into the future.
Well I could, but then I could also offer you some swamp land in Malaysia. However, what I can offer you is the belief that if and when the bull market in gold continues on, tremendous leverage will be found in the junior mining companies that have good resources and or reserves, combined with smart, aggressive, experienced, and ethical, management teams.
Again, as you all know, being a gold or silver investor is not an easy task. Therefore, the gifts I offer you are both tangible and intangible.
The Intangible
On the intangible side, I like many other people, would encourage the gold community to exercise patience. Patience is perhaps the most difficult virtue to learn, practice and incorporate into your investing program, especially where gold and silver investing is concerned. Personally, we’ve been patient for close to five years now and we are still practicing this Zen principle; often times whether we like it or not!
Suffice to say, all of the elements for a higher gold price would appear to be in place. I won’t go into the details in this article, but I will suggest to you that with just the bare minimum of effort, we can all find appropriate reasons as to why gold should be substantially higher than where it is today.
I do not think that gold has had “its day” and I do believe there are political forces that would have gold perceived as a non entity in the financial scheme of things. After all, gold is real money and competes with fiat paper. Common sense would dictate that governments would not enjoy the idea of anything that would come between them and their printing presses. They’ve said as much themselves! Bill Buckler, always eloquent, says it best when he states that gold is a political metal.
There are two things I would have you consider. One is that gold is a storehouse of value and a benchmark against which other things of value, including currencies, can be measured. The second thing to consider is that gold has always been perceived as the thermometer for our economy and the world’s economy. If you break the thermometer, how does one measure the financial elements around you? This idea of a hard asset that is relatively stable, relatively durable, against which other items of value can be measured is indeed a valuable concept. Can you see why the “powers that be” might want to break that thermometer? I just wanted to toss that out there for you to think about. Perhaps you have an idea of another storehouse of value: Silver? Oil? Land? Platinum? Diamonds? It is indeed difficult to come up with something that fills this particular capacity as well as gold does. We’ll follow this concept up at a later date. There is no disputing the fact that gold has been viewed as real money for over 5000 years.
So many “talking heads”, writers, and analysts, would have you trade your gold and gold shares. In and out, up and down, back and forth. Brokerage houses love this sort of thing because of the commissions it creates. Perhaps if you are smart as all “git out”, sophisticated, have an excellent background in technical analysis, don’t mind the commissions, higher taxes, accounting costs, and constant monitoring, trading will work for you.
But don’t be fooled by the advertisements and brochures because trading is a difficult endeavor, even among the so called experts. Did you ever stop to consider why some of those expert traders are still writing advisory letters and charging you exorbitant fees for their advice on the subject? My thoughts are that if their strategies were so successful, they’d be mega millionaires and wouldn’t need to write erudite epistles for the rest of us—how shall we say, less than the expert ones.
I think the best strategy is to identify the primary trend, get in front of it, and stay the course until the masses are clamoring to get on board. That of course is being a bit simplistic, but I’m certain you understand the fundamental concept.
Look, if you want to be successful in any business or in any endeavor for that matter, you should know your subject material, study it, and work hard. It’s that simple. Well, a little luck sure doesn’t hurt now and then. But more than any other thing, doing your homework, or your due diligence where investing is concerned, is the way you help your odds of success to improve. Learn to learn. I wouldn’t advise blindly following the advice of any single person, group or entity. Is it not better to be as informed as possible and then make intelligent choices? Writers, advisors, analysts, promoters, all have their place but the buck stops (or is made or lost) with you.
I personally am a strong proponent of the big picture theory. That is to say, understand the ‘big picture stuff’ and your investing adventures will be easier and more profitable. The big picture revolves around identifying the primary trend of your investment vehicle of choice, understanding the geopolitical climate in the world and certainly in the specific region where you are investing, and having a working comprehension of how the pieces of the puzzle should fit together. Of course, the puzzle doesn’t always fit together like we think it should, but it’s not a bad idea to at least have a plan—and then a backup plan.
I honestly believe that the most difficult commodity to discover in the US these days is accurate news and good reporting. This goes double for the financial press.
Between you, me and the Gatepost, I wouldn’t give you a plugged nickel for half the stuff that passes as financial news. We are in the age of “Spin City”. It is up to each of us to find out the story behind the story; to at least discover the real story without the spin. But alas I digress.
The points I want to make are that patience is indeed a virtue, we need to be our own best advisors, and we need to understand the big picture.
The Tangible
Incidentally, I am not adverse to listening to others, and learning from their successes and failures. In fact my gift to you is a list of six groups or entities from which I’ve gleaned a tremendous amount of information for creating my own personal big picture. From this particular list, you can choose what you will, explore some of the introductory services, avail yourselves of the free ones, hone and refine the list and work towards finding the combination that fits your own particular needs best.
By the way, this is not be construed as any investment advice, and these people or entities to which I refer, do not even know I’m referring them to you as of this writing. That is to say I’m receiving no remuneration in any form for suggesting that you give these sites a “look-over”. I offer them with the idea that perhaps you will benefit from them. That being said, three out of the six do charge for their services and I think they are quite reasonable for the amount of information they offer. I should also mention that these are not places to acquire “hot stock tips” or get rich quick schemes. I also believe, if I’m not mistaken that all of the paid letters have trial subscriptions.
They are places that will help you create your own big picture that is based in truth, and once having done that, you will be able to make better investment decisions. Actually, the old axiom that the “truth will set you free” is not that far off the mark now, is it.
Without further ado, I’ll give you the list and then a few brief comments.
They are in alphabetical order:
1. Bill Buckler www.the-privateer.com
2. Jim Puplava www.financialsense.com
3. Bill Murphy www.lemetropolecafe.com
4. Richard Russell www.dowtheroryletters.com
5. Jim Sinclair www.jsmineset.com
6. GoldSeek.com www.goldseek.com
Bill Buckler writes “The Privateer” out of Australia. I’d like to see every student in high school read his letter for four years. For my money this is the best geopolitical letter on the planet. Mr. Buckler is a very big picture kind of guy who in my opinion is absolutely brilliant. Honest and painfully direct, he understands and communicates what makes politics and economics work. He covers the major countries and the major economies. He also writes a separate weekly column on gold. There is no better way to prepare your kids for college. Read and understand the Captain and the Crew of the Privateer, and you and your family will be better off for it.
I couldn’t leave out “Financial Sense.com” because that is what it is: Financial Sense. Jim Puplava is a soft spoken guy with a great depth of knowledge about the markets and economics. A tremendous amount of material will keep you current on many different facets of investing. Interesting guests, contributing writers, and he utilizes the different elements of the web very effectively. Expect round table discussions, interviews, and internet “radio” broadcasts. Jim has also written The Perfect Financial Storm and I believe he is up to Part V. This will curl your hair but will also keep you well grounded in the real world.
Bill Murphy writes and operates “LeMetropole Cafe.com”. Along with Chris Powell he also heads up GATA or the Gold Anti Trust Action Committee (GATA.org). Bill is a colorful and controversial fellow because he lays his views on the line with no apologies. I personally appreciate him because he is like the ever ready bunny—he just keeps on going. If you’re interested in gold, how it plays into the geopolitical picture and the daily machinations of the movements in the gold market, Bill and his guests will keep you up to speed. Bill writes and reports extensively on a daily basis. From time to time you might pick up an investment idea or two but you’ll have to read between the lines. He, like the other referenced people, is not in the investment advice business. They are more in the presenting the big picture, accurate financial news business. But Mr. Murphy is honest guy who wears it on his sleeve. He believes that the gold market has been manipulated for political ends, and that has won him both high praise and a fair amount of criticism. You just might be reading this piece on www.lemetropolecafe.com.
Richard Russell of the “Dow Theory Letter” writes about the stock market. He is wise beyond his 80 years young. If you subscribe to his letter, you’ll be the beneficiary of his daily commentary in which he not only covers the stock market, but comments on a plethora of other subjects. This is a man who knows about primary trends and has successfully identified them for many years; especially where the stock market is concerned. He is honest and he cares about the world and about his subscribers. I would suggest that he is revered among his readership for this is another big picture guy who calls them as he sees them.
Jim Sinclair of “jsmineset.com” is yet another colorful character with his heart in the right place. He has one of the best overall understandings of how the gold market and the gold community works. I think he knows what he is doing because he has been successfully doing it for so long. He is committed to helping others learn about the gold market and offers many thought provoking essays and pieces on his site. Again, this is a man who is not afraid to call them as he sees them and more often than not he sees them differently than the main stream media. I respect him because he has gone out on a limb on many different occasions to try and help the gold community understand the inner workings of these markets.
Lastly, I’ll suggest a gold web site that is but one part of a trio of excellent web sites operated by my friend Peter Spina. Peter is bright beyond his years and offers you a gamut of gold news, geopolitical news, and is affiliated with some exceptionally erudite groups of investors and analysts. If you are reading this piece, there is a good chance you will be reading it on www.goldseek.com. Keep an eye on what Peter and GoldSeek.com are doing. This year will be a breakout year for them. There are many reasons why I like GoldSeek.com but one of the most important is that this is an honest group and they care about their readership. In terms of gold websites, they have shot up the ratings ladder and are certainly among the top five on the Internet. This is a site without cost so what have you got to lose? You certainly have a lot to gain.
Interestingly enough, as I was writing this piece, several key words and phrases kept popping up, didn’t they. Honest guys, integrity, big picture, bright, caring, and “telling it like it is”. These are phrases and words synonymous with quality. I think you’ll find that these sites and personalities, although all fiercely independent and at times opinionated, do endeavor to offer a balanced view of the real world. The world that is portrayed in the mainstream financial press is not real “en toto”. It has elements that are real, but the picture being portrayed is quite flawed because it is one that helps the status quo, the institutions, and the special interests stay in power and dare I say it—make a grab for your money. But really folks, that can’t come as any big surprise to you.
So do yourself a favor, and get on board with a few of these sites and start creating your own personal big picture. If you do, you are going to have a leg up in 2005 and I have a serious hunch that 2005 might be quite a good year for the gold community and especially the junior mining sector.
Best regards to you and yours and allow me to wish you all a very Healthy, Happy, Successful, and Prosperous 2005.
D. Stewart Armstrong
Consultant to the Junior Gold and Silver Mining Sector
-- Posted Wednesday, 13 July 2005 | Digg This Article
