Lately, I’ve been talking with quite a few managers and CEO’s of junior mining companies and there is an air of frustration in their voices.  We have gold near $600 US and Silver close to $13.00 US and we hear a lot of zzzzzzzzzzzzzzz coming from the public! Of course, people involved in the industry; especially in the Junior Mining Sector are overwhelmingly bullish. Well, some of them are. Others are confused. However, it would seem that many of them are still waiting for the rest of the country, if not the world, to catch up!

It’s a sticky wicket as the English say. By the way, did you ever stop to consider what a sticky wicket is? First, let’s just think of it is a croquet wicket that has Elmer’s glue over the entire thing, with a fine almost invisible mesh covering the opening disallowing the ball, any ball, to get through. Even worse as the ball enters the opening, it becomes stuck to the invisible mesh over the wicket.  Now that would be a sticky wicket? Wot?

Let’s say you and some friends were playing the same course with two different sets of wickets. One set is for you and one set is for your opponent. One set is of the normal variety, and the other set is of the “sticky” variety. All other things being equal, which set of wickets would you choose to play? Of course, I would assume it would be the “unaltered” ones. No one wants to be a victim of the sticky wicket. No one wants to play on an altered course.

But that is indeed what we have here Ladies and Gentlemen—a sticky wicket and an altered “course”. Let’s take this to a different level and look at it a bit differently.

We have a hugely bullish market in the precious metals complex as can be evidenced by the appreciating price of gold and silver over the last five years. However, for the most part the public is unaware of this phenomenon. They are caught in a sticky wicket. Do we participate? Do we sit on the sidelines? What is all the fuss about? Who is telling the truth? What can little ole me do about it? So many questions, so little time.

Metaphorically speaking, the wickets are the informational corridors controlled by the government, the mass media, and the financial press. The glue and the fine mesh over the wicket is placed there by the above mentioned parties in order to filter the news. In other words, the filters are placed over the informational corridors so the public is clueless; but certainly not glue-less as we are all covered in the stuff! 

The public is also stuck in the glue of debt and the vacuum created by a lack of information. We are not only in an existential vacuum we are in an informational vacuum. Therefore we truly are in a sticky wicket. Add to that the idea that we are constantly bombarded with weapons of mass distraction and it becomes even more difficult to get the ball through the wicket or to understand what is going on! Put another way, it is difficult to make intelligent decisions as a society when there is a haze covering the truth of the land.

It is so important to comprehend the nature of this bottleneck where the informational flows are controlled. If it were not for the Internet, I personally believe that we as a society would be even more in the dark. Until the public truly understands the reasons why gold and the precious metals complex are moving, there will be limited activity in the sector relative to the strength of this market.  

There are three prime considerations of which we constantly need to be aware: the dept levels of the entire country, the US trade imbalances, and the state and status of the US dollar. All three are interconnected and I’m certain most of you are sufficiently on the ball to understand the consequences of this interdependence.

The debt levels are especially troubling and that is why at some point due to the systemic risk that level of debt can cause, the dollar will certainly have to suffer the consequences. But more importantly, by blocking legitimate information flows, the public does not really understand how the three items mentioned above intersect and how they will have severe repercussions on their finances and ultimately on their very lives. We all wrestle with these issues on a daily basis whether we understand them or not. They affect our taxes, mortgages, gasoline prices, commodities, national security, and of course all things monetary in nature.

How severe the consequences of these displacements will ultimately be is anyone’s guess. Some say it will only be a mild recession, the kind of which our dear friend Mr. Greenscam, otherwise fondly referred to as Mr. Bubbles, spent most of his career trying to prevent. In the natural flow of modern economic theory, recessions in and of themselves are not a bad thing; in fact they help to maintain a certain balance in the financial cycles. They become dangerous only when they are not allowed to occur and consequences accumulate. Others go so far as to say that as the world loses confidence in the US dollar, having long been the reserve currency of the world, there could be a global collapse of systemic proportions. Something in the middle of those two extremes will probably occur and yes, it scares the hell out of me.

The venerable Richard Russell remarked not to long ago that almost 90% of the public has never handled a gold coin. In all likelihood, even fewer have bought and sold gold stocks. Bill Murphy of GATA (Gold Anti Trust Action Committee) and www.lemetropolecafe.com, recently stated that his sentiment indicator was near its lows. Both of these gentlemen have long been advocates of gold and real money.

Most of the public is totally unaware of this bull market in the Precious Metals Complex.

Why isn’t the general public involved in gold and silver? Why don’t they care about the junior mining companies?

1.       The demographics in the US are predominantly of a younger genre. They are not educated as to the realities of gold, the profit making potential of gold, or what is the difference between gold as real money and fiat currencies which are basically an IOU (nothing) by the Governments of the world. I don’t know if indeed Doug Casey coined the phrase that the US dollar will eventually return to its intrinsic worth, but there certainly appears to be an element of truth to the statement! For over 20 years gold, it has been reinforced by the talking heads that gold is a barbaric relic. Even as the price moves upward, there has been minimal acknowledgement by major institutions.

2.       The public is buried in debt. Do they actually have an additional thousand or two to put into the precious metals complex (PMC)? Many pundits have stated that the average family has less than $1000 in savings. However, when the spark is really lit, there will be sufficient investors to move markets. This will be when the rich get richer just as they are currently doing. I urge you to be one of them as the rich are now in an accumulation mode.

3.       The financial press puts a curtain over gold and silver—they are not responding to the real story as it is unfolding. It is in their best interests to filter the news; to create the sticky wicket so the public remains in the dark as to the seriousness of this situation. If there is a dollar collapse, or even a serious dollar correction, there will be a real run on gold and silver, the likes of which the world has never seen. Which would you prefer; (?) paper or something that has been of tangible value since biblical times?

4.       The US and other Western Countries run on paper. They don’t run on hard assets. Hard assets are the antithesis of everything for which they stand. Of course they are not going to promote the precious metals complex. They can’t print gold or silver.

5.       Many people who have recognized the importance of the precious metals believe they’ve missed the boat---they haven’t. I think there may be much more room to run on the upside than has already appreciated. You can quote me on that. We are still early in the second phase of a three stage scenario. The second phase is the longest, lasting up to several years, and the third phase is the “blowoff” phase and is usually of a shorter duration than the second phase. The third phase is when the fireworks hit and the average person gets sucked into the market by the sheer excitement of it. That is when you will want to be selling into it.

So what in the world is it going to take? In two words, it is knowledge and perseverance. Russell states that the way to make money in a bull market is identity the trend, get in early, and stay with it. Don’t allow doubt and all the “top callers” to push you out. Believe me there are many “doubting Thomas’s” out there!

Do you notice that every time gold and silver go up or down, the media simply has to come up with an idiosyncratic reason for the move? Listen; there are broad trends and forces at work here. Reasons do not have to be parsed down to minutia. Just as you view long term trends on a gold chart, you can utilize that same concept in understanding why the precious metals complex is moving one way or the other.

I would also suggest that you purchase some gold and silver as soon as you possibly can. You can purchase with confidence through Goldseek’s PMV or Precious Metals Vault. Please understand that I’m not writing this essay to entice you into buying from the PMV. But I don’t want you buying from a local store that is going to charge you $50.00 over spot for an American Gold Eagle. You can purchase gold coins, now in the vicinity of $635 per coin. You can purchase US silver dollars or bags or partial bags of pre-1964 90% Silver Coins. The point is to try and purchase some physical commodity from the gold and silver complex from a reputable source. Do not store them in a safety deposit box.

Then if you have a tolerance for risk, look to the quality junior mining companies that I spend a good deal of time writing about. They’ve been doing well and I suspect that they will continue to do so. That is where you will find the enormous leverage that will get you out of debt. But be careful and do your homework.

Avoid being a victim of the sticky wicket, continue to read and perform your own due diligence, look to some of the writers on GoldSeek.com to guide you along with folks like James Turk, Jay Taylor, Richard Russell, Bill Murphy and Jim Sinclair to name but a few. There are many good people out there and you simply need to take advantage of what they are offering. Whatever you do, don’t be caught up in the sticky wicket!

Until Next Time,

D. Stewart Armstrong

Consultant to the Junior Mining Sector

consulting@Seacoastpub.com

-- Posted Tuesday, 11 April 2006 | Digg This Article